Higher prices ensure a smaller profit slump in the construction industry, but the orders are still missing. The decline in residential construction is one reason for this for industry associations.
The slack in construction continued in March. Compared to February, orders recovered by 0.9 percent if price increases and seasonal and calendar influences are factored out, as reported by the Federal Statistical Office. Compared to the same month last year, however, around 20.1 percent fewer orders came in in real terms. Only the significantly increased construction prices ensured that the nominal value of the new orders was only 7.9 percent below the previous year’s value.
On the revenue side, companies in the main construction trades achieved sales of around 9 billion euros in March, 5.7 percent more than a year earlier. Here, too, the strong price increases play a role: adjusted for price, the business has shrunk by 8.2 percent. In the first quarter as a whole, there was also a real decline of 8.2 percent.
Industry associations attributed the numbers to the slump in residential construction. Here the order volume in the first quarter shrank by more than a third in real terms, reported the Central Association of the Construction Industry. For half a year, the order backlog has been used. Now a significant interest rate support is needed, for example through KfW loans, as well as a “temporary suspension of the excessive energy requirements,” said CEO Felix Pakleppa. The main association of the construction industry referred to falling equity ratios and declining investments in companies.
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Source: Stern
