German construction activity growth pace remained strong in June

German construction activity continued with a strong overall pace of growth in June, in spite of the pace of growth decelerating a bit compared to that seen in May. The headline seasonally adjusted Germany Construction Purchasing Managers’ Index dropped slightly to 53 in June from May’s 53.9. The latest reading was widely consistent with the average seen throughout the first half of the year and hinted at a strong pace of growth.

Sector wise, housing activity indicated the strongest pace of growth for the third consecutive month. The rate of growth in residential activity dropped slightly since May but was strong overall. This was also the case for commercial activity, which, like homebuilding, has seen a sustained recovery throughout the second quarter after shrinking in March. Meanwhile, civil engineering activity rose for the first time in five months, although marginally.

With the activity levels continuing to increase in June, constructors increased their purchases of raw materials and building products. The growth in purchasing activity was one of the steepest seen in the past seven years. Thus, supplier delivery times exacerbated, with the deterioration in vendor performance the most noticeable since November 2017.

The pace of employment growth was strong and slightly more rapid than that seen in May. But, constructors’ use of subcontractors dropped in the midst of a further sharp reduction in their availability. Anecdotal evidence implied that several constructors were working at or near to full capacity. Building companies generally stayed positive towards the outlook, but the level of sentiment eased further from April’s recent peak. On the cost front, June saw a sharp and accelerated rise in purchase prices faced by constructors. As well as signalling upward pressure from raw material costs, the survey also emphasized the indirect effect of new toll charges.

At 13:00 GMT the FxWirePro's Hourly Strength Index of Euro was slightly bullish at 64.1686, while the FxWirePro's Hourly Strength Index of US Dollar was highly bearish at -114.927. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex