Sentiment in German Residential Construction Reaches Another All-Time Low

The ifo Business Climate in residential construction has reached a new low. It fell to -61.9 points in February, down from -60.7 points in January. More than half of the construction companies surveyed are dissatisfied with the current situation. Expectations are also stuck at rock bottom. “At present there isn’t a single ray of hope on the horizon for residential construction,” says Klaus Wohlrabe, Head of Surveys at ifo. “Orders continue to be canceled. At the same time, building permits for apartments are in free fall.”

In February, 56.1% of companies reported a lack of orders, up from 52.5% in January. Cancellations also crept even higher to 17.7%, up from 17.4% in the previous month. As a result, construction activity has for some time now had to be scaled back in many places. “Some companies are using price cuts in an attempt to counteract the weak order situation at least a little,” Wohlrabe says.

Civil engineering is also experiencing difficult economic times, albeit not to the same extent as building construction. Here, assessments of the current situation are slightly positive, with 23.5% of companies currently reporting a lack of orders. However, the outlook for the months ahead is also extremely pessimistic.