High interest rates and expensive building materials are increasingly burdening the construction industry. New orders are coming less and less. This is not without consequences for companies and employees.
In construction, the order slump continued in February. Adjusted for the high price increases (in real terms), the value of the orders was 15.4 percent below that of the same month last year, as reported by the Federal Statistical Office.
In January 2023, however, there was a recovery of 4.2 percent due to the increase in civil engineering. The associations of the construction trade and the construction industry warn of the consequences of the drastic slump. The number of bankruptcies and unemployment is already increasing.
The real sales of the companies in February missed the monthly value from the previous year by 6.8 percent, as reported by the Federal Office. Since construction prices rose sharply at the same time, nominal revenues still increased by 7.1 percent compared to February 2022.
Warning of negative consequences on the training market
“Residential construction is in free fall,” explained Tim-Oliver Müller, general manager of the construction industry. In this sub-area, orders fell by 36.9 percent. Many projects that have already been approved are being shelved due to a lack of profitability because the exploding construction costs are making the projects unprofitable. Every fourth construction company complains about a lack of orders. It is no wonder that in January 2023 the construction industry had the highest number of corporate insolvencies, with 246 cases. The number of unemployed skilled workers and civil engineers also increased.
The Central Association of the Construction Industry warned of negative consequences on the training market. After six years of increasing training numbers, you can see a training minus for the first time. 11.3 percent fewer trainees started in the construction trade than a year earlier. “If we want to stop this negative trend – and we have to – we need investment impulses now. Otherwise we will lose the skilled workers that we so urgently need for the increasing demand for housing!”, formulated the association’s general manager Felix Pakleppa.
Source: Stern
