German construction: less severe contraction, costs fall

German construction activity remained firmly in contraction in January 2025, although the pace of decline slowed to its weakest since May 2023.

German construction: less severe contraction, costs fall

The HCOB Construction PMI rose to 42.5 from 37.8 in December 2024. While demand headwinds persisted, contributing to lower workloads, the declines in activity eased across all three major sectors: civil engineering saw the mildest drop in 11 months, and both housing and commercial construction experienced their least severe contractions since May 2023, although housing activity still declined sharply overall. High building and borrowing costs, along with general economic weakness, were cited as factors limiting tender opportunities.

Germany: weaker demand leads to job cuts, cost relief

Lower workloads led to job cuts and reduced purchasing activity. Notably, lower demand for building materials resulted in the first fall in input costs in three months. Business sentiment improved, with firms less pessimistic about the outlook.