German construction sees first signs of slowdown

The German construction boom saw a slowdown in May, but activity remained on a high level. Still, observers believe that the industry cannot remain immune very much longer from the downtrend in the overall economy.

In May, the latest statistics available, orders were up 8% year-on-year in nominal and 2.3% in real terms, according to association Hauptverband der Deutschen Bauindustrie. But the figures differed quite a bit depending on segment. While residential construction remained strong, public construction saw a dip in real terms.

The dip apparently kicked in only in May, as the period from January through May still saw orders up 6.2% in real terms. The order backlog in June was 4.3 months, Kallanish hears from the association.

“Due to the high order backlog, construction companies are still well utilised,” says association managing director Dieter Babiel. Be he cautions that the boom cannot defy the overall economy forever. “The increasing insecurities due to trade disputes and Brexit are toxic for the economy. Companies will be putting their investments on hold, and this will sooner or later filter through to the construction industry,” he says.