Construction: Capacity Utilisation Hits New Record High

After cooling down in January and February, the business climate in construction improved in March, according to the results of the ifo Business Survey. The contractors surveyed were more satisfied with their current business situation than in February, which exceeded its previous record high reached in January. The contractors surveyed are also more optimistic about their six-month business outlook. Their average order backlog was 3.7 months, compared to the far lower level of 3.2 months for the same period a year previously. Capacity utilisation levels in construction climbed to a new record of 78.6%. Machinery capacity utilisation was “only” 76.5% during the same period a year previously. 61% of the contractors surveyed reported constraints on construction activity: just over half cited poor weather conditions as the cause (March 2016: 44%), while 14% of companies complained of a lack of orders (March 2016: 22%). Only 3% of survey participants, by contrast, cited a lack of qualified workers as a constraint on building activity. According to reports by contractors, price increases were implemented more frequently, reaching their highest level since November 1991. Many contractors also see scope for further price increases in the months ahead. A significant share of the contractors surveyed also expect to recruit more staff in the near future.