Construction: Business Climate Improves Slightly

The business climate in construction hit a new record high in September, according to the results of the ifo Business Survey. Both the current business situation and the six-month business outlook improved somewhat. Capacity utilisation edged downwards by 0.4 percentage points to 79.5%, versus 78.4% in the same month last year. The order backlog increased marginally by 0.1 percent to 3.9 months, versus 3.7 months for the same period a year previously. The order backlog grew significantly in 2016 and 2017 in particular. It was 2.8 months on average in 2015, but reached 3.7 months by 2017. The official statistics in structural construction and civil engineering for this period (companies with 20+ employees) point to a stronger increase in the order backlog (real; 2016: + 16.6%; 2017: + 13.8%). In the first quarter of 2018 the order backlog was 8.6% higher than the figure for the corresponding quarter of the previous year. 39% of survey participants complained of constraints on construction activity. Overall, a fifth of contractors cited labour shortages; 6% reported a lack of orders and 4% complained of material shortages. According to reports by contractors, price increases were implemented less frequently. In the months ahead, however, they expect prices to rise in many areas. Contractors plan to continue to recruit additional staff over the next three months.