The German construction industry is struggling. In August, however, orders and sales increased surprisingly significantly. Picture Alliance
The construction industry in Germany is in crisis. High interest rates and construction prices have caused housing construction to collapse.
But there is also positive news: Overall, the construction industry again received significantly more orders in August. Your sales are stable.
This is primarily due to major government contracts for civil engineering, particularly for the expansion of railway lines. What annoys many rail customers is a blessing for many construction companies.
The construction sites on Deutsche Bahn routes and stations are often a nuisance for rail customers, but a blessing for the ailing German construction industry. The modernization of the railway infrastructure with billions of euros of state money is now noticeably supporting the construction industry. Overall, German construction companies are again receiving significantly more orders.
In August, incoming orders in the construction industry rose for the second month in a row. The construction companies received another 10.8 percent more orders than in July, said the company Federal Statistical Office with. In a year-on-year comparison to July 2022, there is actually a real increase of 17.5 percent. Price increases and calendar effects have already been adjusted for.
After the weak first half of the year, construction still has some catching up to do. Despite the strong August, incoming orders in the first eight months of 2023 were still 7.6 percent lower in real terms than in the same period last year. However, the order gap compared to the previous year is becoming smaller.
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The development was supported by civil engineering, for example roads and paths, railway tracks or routes for energy supply. In civil engineering, orders increased by 18.6 percent in June compared to June. Building construction, which is suffering from the slump in residential construction, also received 1.8 percent more orders.
Billions for the railway as an economic stimulus
The boom in civil engineering is fueled by large orders. The expansion of the railway plays a major role in this. “This positive development in incoming orders is good, but can only be attributed to several large orders in railway construction,” commented the general manager of the construction industry, Tim-Oliver Müller. Orders in civil engineering have even doubled.
From the budget of Transport Minister Volker Wissing (FDP), the federal government will invest around nine billion euros in the federally owned railway in 2023. By 2027, the railway is to receive an additional 12.5 billion euros from special federal funds.
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The boom in rail expansion should not obscure the problems in housing construction. Incoming orders are continuing to decline here. In August, orders for new apartments remained 6.5 percent below the already weak previous year. “The bottom in residential construction has not yet been reached and the political measures taken so far have not been enough to turn things around, said Müller.
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Sales in the construction industry are also increasing
Not only did orders for the future increase, current construction business also developed stable in August. Sales in the construction industry were 0.1 percent higher than a year ago. This increase also relates to the real values. The significant price increases have been taken into account. In nominal terms, i.e. including the higher prices, sales rose by 3.8 percent to 9.9 billion euros.
Here too, there is still a lot of business to catch up on. In the first eight months of 2023, total sales in building and civil engineering remained 4.0 percent below the previous year.
The number of people employed in the construction industry increased by 1.2 percent in July 2023 compared to the same month last year.
The mood among construction companies is rather gloomy, although it is improving slightly. This was the result of the monthly survey Ifo Institute for your business climate. The construction industry index rose slightly in October. The construction companies assessed their current situation somewhat worse. But they were at least a little less pessimistic about the next six months than in September.
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