Construction: Increasing Labour Shortage

In May, the business climate indicator for the construction industry exceeded the 20-point mark, climbing to a new record high. According to the results of the ifo Business Survey, the participating contractors have never assessed their current business so positively. Since spring 2015, the current business situation has improved considerably – by a total of 44 balance points. In contrast, companies look less confidently to developments in the coming six months. Equipment utilisation increased from 78.5% to 79.9%, up 1.8 percentage points on the previous year. About one third of the survey respondents reported production constraints; 18% of the construction companies complained of labour shortages. This matches the previous peak of last November and was by far the highest value ever measured in the month of May. In addition, 12% of the firms complained of adverse weather conditions and 7% of a lack of orders. On average for all construction sectors, order reserves held steady at 4.0 production months (May 2017: 3.8 months). The survey responses indicate that the prices for construction work could be raised in large parts of the country – the value for this question has risen to a new all-time high. With regard to the scope for price increases in the coming month, contractors remain optimistic. The increase in employment is expected to continue over the next three to four months. Since April 2017, the survey values have been above the mark of 10 balance points, and thus at an exceptionally high level. According to information from the Federation of the German Construction Industry, the increase in the number of employees since 2011 is almost entirely due to the recruitment of foreign workers. As a result, their share of employees in the construction industry subject to social insurance has since doubled to 16%.