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Strong growth in Germany’s construction industry for a record seven months

Strong growth in Germany’s construction activity continued in May, with the rate of expansion the second-fastest in 14 months.

The findings are from the lastest IHS Markit Germany Construction Purchasing Managers’ Index (PMI) survey. New orders increased for a survey-record seventh consecutive month. Growth rates for employment and purchasing activity were found to have accelerated since April and were among the strongest registered in the survey history.

Adjusted for seasonal factors, the headline PMI – which is based on a single question asking respondents to report on the actual change in their total construction activity compared to one month ago – remained well above 50.0 in May, indicating strong growth in German construction activity. Moreover, the PMI increased from 54.6 in April to 55.3, signalling the second-fastest rate of expansion since March 2016.

Demand for construction inputs placed pressure on suppliers, whose delivery times lengthened to the greatest extent in over 10 years. Input prices continued to rise sharply, albeit at the slowest rate in five months. Meanwhile, the outlook for activity over the next 12 months was the second-strongest in the survey history.

Strong growth of activity was broad-based across the three monitored areas of the construction sector in May. Civil engineering recorded the sharpest rate of expansion and the third-fastest growth in the series history. The rate of expansion in residential construction almost matched that seen in civil engineering, while commercial activity increased at a slower rate.