The moribund German economy suffered a fresh setback amid warnings there is ‘no end in sight’ to the crisis gripping its construction industry.
In a bleak update, S&P Global said the index of activity among German builders tumbled to 36.3 last month, well below the 50 cut-off between growth and decline.
The data provider said it was ‘again one of the lowest’ readings ever recorded and implied ‘a sharp rate of contraction in overall building activity’.
Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, which compiled the report with S&P, said: ‘Just when you think it cannot get any worse, it can.
The German construction sector is extending and deepening its downturn with no near end in sight.’
Construction slump: A block of flats under construction in Frankfurt, Germany. S&P Global said the index of activity among German builders tumbled to 36.3 last month
By contrast, S&P found optimism among UK builders at the highest for two years as the prospect of interest rate cuts boosted morale.
While the index of activity in the sector remained below 50 at 48.8, this was the highest since August last year, and confidence was strongest since January 2022.
Tim Moore, economics director at S&P Global, said: ‘UK construction companies seem increasingly optimistic that the worst could be behind them soon.’
Germany was the worst performing of the major economies in the G7 last year and looks set to be again in 2024, according to recent forecasts from the Organisation for Economic Cooperation and Development and the International Monetary Fund.
‘A turn for the better is not in sight for the German economy,’ said Commerzbank senior economist Ralph Solveen.
Germany has dragged down the rest of the eurozone with January the worst month for the construction sector in the single currency bloc since May 2020.
