Germany‘s residential construction sector is facing a lack of orders, meaning the industry ‘remains tense’, new data from the ifo Institute has revealed.
In December, some 53.6% of firms working in the residential construction sector reported a lack of orders, down from 54.0% in November, however “structural problems in residential construction still remain,” commented Klaus Wohlrabe, head of surveys at ifo.
“The new German government faces major challenges in creating urgently needed living space,” he added.
While the business climate in the German residential construction segment has ‘improved slightly’ according to ifo, it still remains in negative territory.
Companies in the sector are somewhat less pessimistic about their current situation and future prospects than in November, and the rate of order cancellations has decreased to 10%.
“The lower interest rates alone have so far not been enough to reverse the trend in residential construction,” Wohlrabe added. Read more here.
Automotive sector
Elsewhere, a separate study from ifo found that sentiment in the German automotive industry is worsening, with the business climate index falling to -34.7 points in December, down from -32.4 points in November.
The decline was primarily due to significantly more pessimistic expectations, although the assessment of the current business situation was slightly more favourable. Business expectations fell to -37.1 points, down from -30.9 points, while the business situation indicator rose slightly to -32.3 points, up from -33.8 points.
Commenting, ifo industry expert Anita Wölfl said that the “automotive industry has thus slipped deeper into crisis”.
A large number of companies in the German automotive sector reported insufficient order backlogs to fully utilise their production capacities, while export expectations also decreased to -20.3 points, down from -19.1 points. The negative trend continued in terms of employment, with personnel planning expectations dropping to -36.7 points, down from -33.9 points. Read more here.
