Construction sector sentiment has increased, reveals IFO.
In the construction sector, there's been a noticeable change in atmosphere as per a survey by the Munich Ifo Institute. The vibe in residential construction has noticeably improved, reported the Ifo Institute. Yet, most companies remain skeptical. The climate in civil engineering projects has also remarkably improved. As Ifo expert Klaus Wohlrabe put it, "The road to recovery is still a long one."
Residential construction companies, according to Wohlrabe, have presumably moved past the bottom. The prominent issue continues to be the dwindling order backlog. In May, 51.7% of the companies reported a decrease in orders compared to April, which was 55%.
As for cancelled projects, there's no reason to celebrate, says Ifo: In May, 15.1% of the companies reported cancelled projects, compared to 17.6% in April. Many companies are trying to combat the order backlog by slashing prices, according to Wohlrabe. The index for business climate in residential construction improved from minus 52.3 points in April to minus 46.4 points.
In comparison, the business climate in civil engineering, according to Ifo, is significantly better than in residential construction with a minus 6.7 points in May, compared to minus 10.2 points in April.
"Deep builders are in a much brighter mood about their current business," Wohlrabe clarified. They would, however, welcome more orders.
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The construction industry's improved mood, as indicated by the Ifo, could potentially lead to an increase in recreational activities in newly constructed areas. Despite the path to recovery being long, as mentioned by Ifo expert Klaus Wohlrabe, there's hope for further development in the sector. On the other hand, companies in the civil engineering sector, with a more favorable business climate than residential construction, are still yearning for more orders to boost their activities.
