Construction: Constraints from Skilled-labour Shortage at a Record Level

The business climate indicator for construction rose to a new all-time high in August. According to the surveyed contractors, the current business situation as well as the six-month outlook have improved compared to July. The equipment utilisation rate decreased by 0.3 points to 77.5%; however, it remained well above the level 12 months ago. Nearly 30% of the survey participants reported constraints in construction activity. The lack of skilled labour was reported as a constraint by 15% of the respondents, the highest level ever. The demand for construction services – already at a high level – continues to increase. According to the Federal Statistical Office, in the first half of 2017, the turnover of companies in the construction industry with 20 or more employees increased by a nominal one tenth compared to the same period of the previous year. At the same time, new orders increased by 5.5%. Order reserves rose, on average, by 3.7 months (August 2016: 3.4 months). On balance, 15% of the surveyed companies assessed their order backlogs as relatively large; a year ago, in contrast, the share of responses that saw order reserves as too small held the balance slightly. The survey responses suggest that contractors were able to implement price increases more often. In the coming months, however, the scope for price hikes is likely to decrease somewhat. Many of the surveyed construction companies expected a further increase in their number of their employees.