The latest results from the German Purchasing Managers鈥� Index (PMI) show input costs rising at the fastest rate in over 4.5 years.
Data collected from 12-30 January showed that German construction firms were experiencing slower growth in activity, but were nevertheless more optimistic about the coming year than at any time during the survey鈥檚 history. New orders, employment and purchasing activity all increased, albeit more slowly than in December. Meanwhile, cost pressures continued to mount, with the rate of input price inflation hitting a 56-month high.
Adjusted for seasonal factors, the headline PMI 鈥� 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 鈥� pointed to a slowdown in output growth during January. The latest figure of 52.0 was the lowest since last August, down from December鈥檚 nine-month high of 54.9.
The steepest rise was again seen in housebuilding, although the rate of expansion slowed to the least marked in five months. Civil engineering was the only sub-sector to see a quicker increase than in December. Commercial activity rose only marginally.
聽Philip Leake, economist at IHS Markit said: 鈥淕rowth of Germany鈥檚 construction sector cooled in January, with activity rising at the weakest pace in five months. While the slowdown is disappointing given the sector鈥檚 buoyant performance in December, it is little cause for concern. Growth remained broad-based across residential, commercial and civil engineering activity, driven by a third successive rise in new work.
聽鈥淏oth employment and purchasing activity increased for the nineteenth straight month, suggesting that constructors anticipate further growth at least in the near-term. This view was strongly reinforced by the year-ahead outlook for activity, which improved to its best since the survey began in 1999. Firms鈥� sentiment strengthened in spite of mounting cost pressures and a greater squeeze on margins. Purchase prices rose at the fastest rate in over four-and-a-half years.鈥�
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