Berlin Due to rising material costs and higher interest rates, German construction companies are losing orders. New business in the main construction trades fell by 6.0 percent in August compared to the previous month, as the Federal Statistical Office announced on Tuesday.
Compared to the same month in the previous year, there was even a minus of 15.6 percent after adjustment for inflation – this is the fifth decline in a row and at the same time the strongest since the beginning of this time series in 2015. Not price-adjusted was the nominal order intake due to increased construction prices with a volume of 7 .9 billion euros, still 0.8 percent above the level of the same month last year.
Recently, the bad news from the construction industry has been piling up, which in recent years has also been one of the economic pillars due to the extremely low interest rates Germany belonged.
The Munich Ifo Institute reported a wave of cancellations in residential construction. In September, 16.7 percent of the companies surveyed were affected, up from 11.6 percent in the previous month, the surveys of companies showed. “Due to the exploding material and energy prices and the rising financing interest, planning security is gone,” said Ifo researcher Felix Leiss. “Construction costs keep going up. For some builders, all of this is no longer feasible, they put projects on hold or pull the ripcord completely.”
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In the first eight months, incoming orders in the main construction trades fell by 5.2 percent, adjusted for inflation, compared to the same period of the previous year, while they grew by 10.3 percent in nominal terms. Sales developed in a similar way: from January to August, they fell by 4.3 percent in real terms, while increasing by 11.5 percent in nominal terms.
According to the statistics office, the number of people working in the main construction trades increased by 1.4 percent in August, despite the slump in orders.