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Construction of apartment buildings in Leipzig:
Photo: Jan Woitas/dpa
The decline in the German construction industry continued at the beginning of the year. Adjusted for inflation, new orders in the construction industry in January were 7.4 percent lower than in December, as the Federal Statistical Office announced. Sales also fell significantly: in real terms they fell by 5.3 percent compared to January 2023. The Main Association of the German Construction Industry (HDB) spoke of a “weak start to the year”. The same trend was shown last week by figures for building permits issued.
Residential construction was primarily responsible for the decline in orders: here, orders fell by an above-average 17.8 percent in January. A rapid turnaround is not expected given the recent sharp decline in building permits. Building construction as a whole - which, in addition to housing construction, also includes the construction of factories or administrative buildings - reported a real decline of 12.0 percent compared to the previous month. New business in civil engineering, which also includes state-dominated road construction, shrank by 3.1 percent at the beginning of the year.
“At the beginning of the year, the uneven development in the construction industry continued,” said HDB Managing Director Tim-Oliver Müller, commenting on the development. "On the one hand, the still disastrous situation in housing construction and, on the other hand, compensating for major projects in civil engineering, where railway and cable line construction are located." The latter achieved an increase in orders of 20 percent.
An upswing in the construction industry is not expected any time soon. The mood in the construction industry brightened somewhat in March, as can be seen from the monthly company survey by the Ifo Institute. Expectations increased after the historic low in the previous month. “However, the outlook remains bleak,” is the conclusion of the Munich economic researchers.
Sharply increased interest rates, with which the European Central Bank (ECB) wants to combat high inflation, are particularly causing problems for housing construction. This makes many projects too expensive for builders. According to many experts, this is a social problem, as affordable housing, especially in cities, is likely to remain in short supply for years to come.
The federal government's former goal of completing 400,000 new apartments every year is becoming increasingly distant for the trade union-affiliated Institute for Macroeconomics and Economic Research (IMK). “Based on the current order intake, it is likely that only a little more than half as many apartments will be completed,” said IMK scientific director Sebastian Dullien.
dab/Reuters