German construction activity growth halts in July

German construction activity growth halted in July, with a renewed fall in civil engineering work coinciding with slower growth in both commercial and housing activity. The headline seasonally adjusted Germany Construction PMI dropped in July to the lowest in four months and came in below the average seen in the first half of the year.

July saw just marginal rises in housing and commercial activity as the respective rates of growth fell for the second consecutive month running. However, civil engineering remained the worst-performing area of the industry, which returned to contraction after a small rebound in June.

Meanwhile, new orders growth resumed in July after stagnation at the end of the second quarter. Though reports from panellists hinted at demand for new projects from clients, including public tenders, capacity restraints in the sector continued to be evidence and the level of new orders received was up just marginally from the previous month.

Constructors continued to take on new staff in July, but the pace of job creation was below the highs seen around the turn of the year and the lowest overall since January 2017. Latest survey data also indicated a sharp fall in the availability of sub-contractors.

Capacity pressures in the sector were also seen in a further marked lengthening of supplier delivery times, which increased on average to the greatest degree since November last year. Higher demand for building materials meanwhile continued to help drive up the average price of purchases faced by constructors. The pace of inflation remained the same since June and stayed elevated in the context of historical data. Surveyed businesses also frequently cited the effect of new road tolls on input costs.

Finally, latest data indicated a modest rebound n constructors’ sentiment towards future activity, with the survey’s measure of business expectations picking up from a seven-month low in June. The extent of optimism signalled was still well below the highs seen earlier in the year, however.

At 16:00 GMT the FxWirePro's Hourly Strength Index of Euro was neutral at -33.0082, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -4.36776. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex