Germany construction PMI hits 9-month high in December amid robust rise in new work

Growth of Germany’s construction sector gathered speed in December, with activity rising to the greatest extent in nine months. Higher new work was a key factor behind the expansion – the latest increase was the second-quickest on record.

At 54.9, up from 53.9 in November, the headline seasonally adjusted Purchasing Managers’ Index (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, pointed to a sharp and accelerated rise in output during December. The latest expansion was the quickest in nine months, with the fourth quarter average (53.9) being the highest since the first three months of 2016.

Activity growth was broad-based by category. Housing activity rose quickest, followed by commercial building output. Civil engineering posted only modest growth, but the rise ended a two-month sequence of decline.

Greater purchasing activity was another by-product of new business growth. Input buying rose for the seventeenth month in a row, with the latest increase the steepest since February. Improved demand for inputs was reportedly a factor behind slower deliveries, however. Suppliers’ lead times lengthened to the greatest extent since September.

Finally, optimism was widespread in December. Nearly 20 percent of panellists expect output to rise in 2017, in line with forecasts of stronger demand, new projects and better pre-planning, while only 6 percent anticipate a fall.

"With client demand strengthening, firms are optimistic about 2017-sentiment towards the year ahead improved to the best since May. However, price pressures appear a possible threat to the outlook," said Philip Leake, Economist, IHS, Markit.

Meanwhile, EUR/USD traded at 1.05, up 0.25 percent, while at 8:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at 42.13 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex