Germany Construction Activity Weakens At Sharpest Rate In 15 Months

(RTTNews) - Construction sector activity in Germany deteriorated in June at a sharpest pace in 15 months, led by a steep fall in new orders, prompting firms to reduce workforce, survey figures from Markit Economics showed Friday.

The seasonally adjusted purchasing managers' index fell sharply to 45.5 in June from 48.1 in the previous month, extending the current sequence of contraction to three months. A reading below 50 indicates contraction in the sector.

Among the sub-sectors, the civil engineering activity dropped sharply in June, with the rate of contraction the fastest in over two years. Residential building work shrunk for a third consecutive month, though only marginally. Meanwhile, commercial activity declined for the first time in fourteen months and at a faster rate than housing activity.

In June, new orders decreased further and at the steepest rate in 15 months. This trend forced constructors to lower their purchasing activity in June. Buying activity dropped for the third month in a row and at the quickest pace since March 2013.

After a fourteen-month period of rising workforce numbers, employment at construction fell in June. But, the rate of job shedding was modest and weaker than the series average.

Input costs rose again in June, extending the current sequence of inflation to 59 months. Further, firms were optimistic regarding their 12-month outlook for activity, which was the strongest in three months.

"The only bright spot in the survey result is a positive outlook for the year ahead, which companies generally linked to work in the pipeline", Oliver Kolodseike, economist at Markit said.