Cancellation Rate Falls Slightly in German Construction
The wave of building construction cancellations in Germany is receding a little. In October, 11.3 percent of businesses were affected, down from 13.2 percent in September. “Faced with construction costs that are often almost impossible to calculate and rapidly rising construction interest rates, many builders are throwing in the towel and putting projects on hold or canceling them altogether. We’re seeing lots of order cancellations in residential construction. But commercial building construction is also struggling with cancellations,” says ifo researcher Felix Leiss.
In residential construction, the share of businesses affected stood at 14.5 percent, down from 16.7 percent the previous month. The figure was 9.1 percent for commercial building construction (11.1 percent in September) and 6.6 percent for public sector building construction (7.2 percent). “For a handful of businesses, the situation is starting to become threatening: 6.6 percent of building construction firms report financing difficulties. In October last year, the figure was only 0.6 percent,” Leiss says.
Expectations for the coming six months are dominated by concerns. They fell to minus 53.8 points – their lowest value since the survey began in 1991. The prevailing material shortages are easing only very slowly, with 30.2 percent of businesses complaining about supply bottlenecks, down from 32.1 percent in the previous month. “Meanwhile, construction prices are continuing to rise as a result of shortages and high energy costs. A great many businesses are planning to up their prices further in the coming months,” Leiss adds.
