Construction: Current Business Situation Assessments Hit Record High

The business climate indicator for construction fell in February, according to the results of the ifo Business Survey. Although the current business situation was assessed more positively than ever, the six-month business outlook clouded over visibly. Since October 2017 the indicator for expectations has fallen by 13 balance points and is currently at the same level as in June 2016. In line with the official statistics on order intake, ifo figures suggest that the strong upward dynamic, which has been particularly clear in the new construction segment, will lose impetus in the near future. The average order backlog across all construction segments fell by 0.3 months to 3.5 months. At the same time, machinery capacity utilisation rose to a record figure of 82.6% (February 2017: 75.8%). Almost three fifths of the contractors surveyed reported constraints on construction activity; while 47% complained of poor weather. Contractors also cited a lack of orders (10%) and staff shortages (9%) as constraints. According to firm reports, price increases were implemented in many cases. Survey participants expect this development to continue over the next three months. Although the contractors surveyed plan to continue to hire additional staff, the indicator fell just short of January's record this month.