Technical Analysis

Germany December construction PMI 41.7 vs 41.5 prior

German construction activity saw little improvement towards the end of last year, with overall conditions still deep in contraction territory. New orders fell sharply once again with residential activity also declining strongly in December despite input cost inflation retreating to a two-year low. S&P Global notes that:

“The construction sector, and especially housing activity, remained under pressure from a variety of factors during December. A toxic mix of spiraling prices, rising interest rates and a general lack of appetite for investment due to the uncertain economic outlook has led to a sustained drop in demand for construction work, with the effects seemingly having the greatest impact on residential building projects.

“Construction companies were downbeat about the outlook for activity in 2023, and more so than their counterparts in manufacturing and services. However, with a cap on energy prices coming into effect and a sustained sharp slowdown in the rate of input cost inflation to a two-year low suggesting the worst of the price pressures are in the past, expectations did improve further from last October’s recent low.”

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