Construction: Situation in Structural Sector Is Stronger Than Ever

After last month's setback the business climate in the construction sector improved, according to the results of the ifo Business Survey. Both assessments of the current business situation and the six-month business outlook closed the year more positively. Capacity utilisation rose to 78.3%, taking it more than one percentage point above last year's figure. 36% of the contractors surveyed reported constraints on construction activity. 16% complained of a shortage of workers (December 2016: 9%), 15% of negative weather influences and 8% of a lack of orders. The order backlog remained at a record level of 3.8 months (December 2016: 3.5 months). On balance, around 14% of contractors see their order backlog as relatively large; a year ago this figure was just 4%. According to firms, price hikes were implemented on a similar scale as last month. Many contractors expect further price increases in the near future. Contractors' optimism about construction price developments over the next three months reached its highest level since March 1992. Contractors expect to recruit additional staff in the months ahead, with the survey result once again close to its historical record high.