German construction sector continues to record strong growth rate in October

Germany’s construction sector continued to record strong pace of growth in October in spite of intense capacity pressures. The headline seasonally adjusted PMI came in at 53.3 in the month, slightly down from September’s 53.4. Even if this hints at a strong pace of growth in all, this was the lowest reading for nine months. All three wide areas of construction saw rises in activity in October. Homebuilding was the best performing area, recorded the most solid growth for three months. But commercial activity grew at the softest rate since February, while civil engineering activity lost additional momentum and grew just marginally.

Construction firms saw a rise in new orders for the 12th consecutive month in October. The pace of growth was at a four-month low and just modest, but anecdotal evidence suggests that capacity issues have prevented some companies from accepting new business.

Ongoing attempts by building firms to stimulate workforce figures resulted in an additional surge in sector employment in October. The pace of job creation was amongst the most rapid seen data collection started in late 1999.

In the meantime, the survey in October indicated another significant rise in constructors’ purchases of building materials and components, with the pace of growth remaining widely consistent with the year-to-date average. This in turn has exerted additional strain on suppliers. Increased demand for materials was also seen in an additional pick-up in purchase price inflation to the highest since March 2011. Meanwhile, latest data indicated ongoing positivity amongst constructors towards future growth prospects. Expectations rose from September, though they continue to be lower than the levels witnessed in the first half of 2017.

At 15:00 GMT the FxWirePro's Hourly Strength Index of Euro was neutral at -34.8908, while the FxWirePro's Hourly Strength Index of US Dollar was slightly bullish at 51.4941. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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