Large contracts lift German construction orders by 23 percent
Germany’s construction orders rose 23 percent in August from July, the biggest monthly increase since the series began in 1991. Large infrastructure contracts drove the advance. The construction association ZDB said the surge had bypassed much of the medium-sized industry, where equipment remained underused. Building orders were still lower than a year earlier.
Economics & Markets··Night
Large contracts drive a record monthly increase
Germany’s construction orders rose 23 percent in August from July after adjustment for prices, seasonal patterns and calendar effects. It was the largest monthly increase since the series began in 1991. Several large contracts drove the advance, with civil engineering orders rising 31.6 percent and building construction orders increasing 12.4 percent.[1], [2]
Germany’s federal statistical office Destatis released the figures on October 23. Orders in June–August were 7.6 percent higher than in the previous three months. That less volatile comparison showed civil engineering up 13.8 percent, while building construction increased 0.6 percent. The monthly and three-month figures both measure orders after price, seasonal and calendar adjustment.[1]
Builders say the surge bypasses medium-sized firms
Germany’s construction association ZDB, which represents construction businesses, said the surge did not reflect a broad recovery among medium-sized firms. Managing director Felix Pakleppa pointed to a few large infrastructure contracts, particularly in Bavaria. He said housing orders rose almost 28 percent in nominal annual terms, but growth would have been only 1.6 percent without one large accommodation contract from the Bundeswehr, Germany’s armed forces.[2]
Pakleppa criticised procurement lots large enough for only a few major companies to bid. He said medium-sized businesses retained spare capacity and put average equipment utilisation in building construction at 45 percent. The comments concerned the distribution of orders and tender sizes across the industry.[2]
Annual building orders fall while infrastructure expands
Compared with August of the previous year, real construction orders increased 17.3 percent after calendar adjustment. Civil engineering orders rose 36.4 percent, while building orders fell 1.7 percent. Real construction revenue grew 4.9 percent annually. At current prices, revenue increased 10.1 percent to 10.9 billion euros. The survey covers establishments belonging to businesses employing at least 20 people, principally in structural building work, civil engineering and specialised construction.[1]
The ZDB put nominal revenue growth in commercial construction at 16.5 percent, mainly supported by infrastructure projects. Public construction revenue increased 6.7 percent, while housing revenue rose 1.6 percent. The ZDB identified commercial construction as the branch with the strongest nominal revenue growth.[2]
