German Construction Activity Remains Firmly In Recession Zone

(RTTNews) - Germany's construction sector remained deep in the recession zone in December as political uncertainties damped orders, survey data from S&P Global showed on Tuesday. The HCOB construction Purchasing Managers' Index dropped to 37.8 in December from 38.0 in November. The score was the lowest since last April and signaled a notable contraction in the sector.

Political uncertainty seems to have played a big role, with the looming federal elections prompting many companies to adopt a wait-and-see attitude, perhaps hoping a new government might ease building regulations, Hamburg Commercial Bank Chief Economist Cyrus de la Rubia said.

Residential work registered its sharpest decrease in four months. Civil engineering also declined at a slightly quicker pace, while the drop in commercial activity was slightly less marked than in November.

The companies continued to register lack of new orders as potential customers were hesitant to place orders due in part to uncertainty towards the outlook and high prices.

Firms were downbeat about the prospects for the coming year with 49 percent of respondents forecasting a contraction. Constructors continued to trim employment in December. They also pared back their usage of subcontractors, which fell sharply and at a pace that only slightly slower than November's survey record. Meanwhile, an improvement in subcontractor availability contributed to a further but slower fall in the rates they charged. At the same time, constructors reported no change in the average cost of building materials and products, following a fractional increase the month before.