GERMAN DATA
German construction orders decreased by 1.5% M/M in April after two months of expansion. Based on today's print, it appears unlikely that Q2 GDP sees construction repeats the positive 0.3pp positive contribution that was seen in Q1. While volatile, construction has not seen a material shift since last August.
- Construction orders (seasonally-adjusted volumes) have largely moved back to levels seen after the 2022 inflation surge (after a temporary spike last summer) and remained there for the last couple of months.
- Construction production has also decreased again recently after seeing a weather-related bump in January/February this year (-2.1% M/M Apr vs -1.0% Mar).
- Building permits meanwhile have seen some revival in their yearly rate on the back of base effects (-20.8% Y/Y Feb vs -27.2% Jan, -39.4% Dec), leaving the monthly number low by historical standards. The lower number of building permits does, however, partly reflect that the average project has increased in size.
- Sentiment in the industry remains subdued. Although the construction sector IFO Business Climate and construction PMI both have moved away from their lows (IFO -25.0 Jun vs -25.6 May, -36.2 Jan; PMI 38.5 May vs 37.5 Apr, 36.3 Jan), improvement remains limited, leaving both indicators deeply in contractionary territory where they moved around Spring 2022.
- Overall, respective production data started off Q2 on a weaker note, and also incoming orders / permits do not give rise to construction being a notable upside driver to sequential GDP growth again.
MNI, Destatis
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