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Construction sector sentiment improved - "Yet, the journey towards full recovery remains arduous"

Optimism swells within the construction sector, as per a survey by the Ifo Institute based in Munich. The Ifo Institute stated on Monday that the business environment in residential construction showed a substantial improvement. Despite this, the majority of companies remain negative. Notably,...

Apartment buildings in Berlin
Apartment buildings in Berlin

Construction sector sentiment improved - "Yet, the journey towards full recovery remains arduous"

Construction firms, as per Wohlrabe's analysis, are optimistic about moving past the rough patch. A persisting challenge remains the pile of pending orders. In contrast to April, only 51.7% of companies reported more orders in May compared to the previous month which was 55%.

As for canceled projects, no reprieve is in sight, according to Ifo: In May, 15.1% of companies reported project cancellations, compared to 17.6% in April. To combat the order backlog, companies are resorting to price cuts, Wohlrabe pointed out. The business climate index for the housing construction sector improved from -52.3 points in April to -46.4 points.

The business climate in the civil engineering sector outperforms housing construction, Ifo reports. In May, the index stood at -6.7 points, compared to -10.2 points in April.

Wohlrabe added, "Civil engineers are much more content with their current operations." However, they're eager for more orders.

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  1. Despite the improvement in the construction sector sentiment, Klaus Wohlrabe emphasized that the road to full recovery is still steep, with residential construction being particularly affected by the backlog of orders.
  2. Ifo's survey revealed that the business climate for the construction industry improved in May, showing a decrease in negativity, although cancellations of projects continue to pose a challenge.
  3. In line with the overall optimistic mood, the business climate index for residential construction improved, indicating that companies are looking for ways to combat the order backlog, such as implementing price cuts.
  4. Recreation activities, such as domestic trips or outdoor activities, could potentially benefit from the improved mood in the residential construction sector, as an increase in orders might lead to more housing units being completed, in turn increasing the number of available homes.
  5. Wohlrabe stressed that the civil engineering sector is currently thriving compared to residential construction, with civil engineers expressing more contentment with their current operations and expressing a desire for more orders to further boost the construction industry.

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