Construction: Business Expectations Turn More Optimistic

The business climate indicator for construction climbed to 30 points for the first time in August. According to the results of the ifo Business Survey, the current business situation only improved marginally, but nevertheless hit an all-time high. The survey figures on assessments of the future business situation, by contrast, increased far more sharply. Machinery capacity utilisation dropped marginally to 80%, but remained around 2 percentage points above the figure for the same period of the previous year. 38% of the contractors surveyed reported constraints on their construction activity. 16% complained of a lack of skilled workers, while 8% cited unfavourable weather conditions, 6% cited a lack of orders and 5% complained of material shortages. The average order backlog across all segments of construction fell to 3.8 months (August 2017: 3.6 months). On balance, 24% of the contractors surveyed described their order backlogs as relatively large, versus just 12% for the same period a year previously. Firm reports suggest that prices increases were implemented less frequently than recently. However, expectations in terms of scope to increase in the months ahead improved for the fourth month in succession. Many contractors plan to hire additional staff.