05-Jun-2025 15:28

Germany's construction sector contracted further in May on accelerated declines in housing and commercial activity segments, survey results from S&P Global showed Thursday.

The HCOB construction Purchasing Managers' Index registered 44.4 in May, down from April's 26-month high of 45.1.

The index moved further below the threshold 50.0, suggesting contraction in the sector.

Both housing and commercial activity segments registered sharper declines. Housing activity remained the weakest-performing category. Meanwhile, civil engineering activity stabilized in May, ending a 20-month sequence of contraction.

New orders dropped at a marginally faster pace in May after registering the weakest decline in more than three years. Higher uncertainty and elevated prices continued to weigh on demand.

Sentiment in the construction sector turned positive for the first time since early 2022 with confidence running well above the historical average.

The pace of job shedding quickened for the second straight month and also marked the fastest fall since February. Meanwhile, the fall in purchasing activity eased for the fifth straight month.

Lead times on building materials and products shortened for a fourth consecutive month in May.

On the cost front, building companies reported a rise in input prices for the third time in as many months. The rate of inflation climbed to its highest since February 2023. Likewise, rates charged by subcontractors increased at a below-trend rate.

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