7th May 2025

Key findings:

Total Activity Index climbs to 26-month high of 45.1
Demand shows tentative signs of stabilising as decline in new orders slows
Expectations tick down slightly from March’s 37-month high

The downturn in Germany’s construction sector eased considerably at the start of the second quarter, with the latest HCOB PMI® survey results showing much slower rates of decline in both total industry activity and new orders. Firms’ expectations did however weaken slightly after hitting a 37-month high in March, while the pace of job shedding also quickened following the slowest decrease in workforce numbers for nearly two years at the end of the first quarter.

Cuts to both purchasing activity and subcontractor usage slowed in April, maintaining the trends towards stabilisation observed throughout the year-to-date. Input costs meanwhile rose to the greatest extent for 14 months, though only modestly by historical standards.

The HCOB Germany Construction PMI Total Activity Index – a seasonally adjusted index tracking month-on-month changes in total industry activity – rose to steeply from 40.3 in March to 45.1 in April. Although still firmly below the neutral 50.0 threshold, the latest reading was the highest for more than two years.

There were slower decreases in activity in each of three broad construction categories monitored by the survey. Housing continued to exhibit the steepest rate of decline, but one that was the least marked since February 2023. Commercial activity posted its softest reduction in nearly two years, while civil engineering – once again the best-performing segment – saw only a modest fall that was the slowest for 14 months.

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The rate of contraction in new orders eased considerably at the start of the second quarter, with the respective index recording one of its largest month-on-month rises in the series history to move to its highest level in more than three years (although it was still comfortably below the 50.0 no-change threshold). There were reports from surveyed firms of high prices weighing on demand, as well as uncertainty among customers.

Panel members also reported that uncertainty had dampened expectations towards activity in the coming year. Firms were slightly more pessimistic about the outlook than in March, although confidence levels were still the second-highest in the past 38 months.

The setback in expectations was recorded alongside a slight pick-up in the rate of job shedding across the building sector in April. That said, this came on the back of only a modest decrease in employment in March that was the weakest for almost two years.

The rate of contraction in constructors’ purchasing activity slowed for the fourth month in a row in April and was the weakest since January 2023. It was a similar story for subcontractor usage, which registered the smallest decline since February 2023.

German constructors faced a third straight monthly rise in rates charged by subcontractors, as well as back-to-back increases in prices paid for building materials and products. The rate of input cost inflation remained relatively subdued despite ticking up to a 14-month high.

Delivery times on purchases quickened in April, as has been the case in all but one of the past 14 months. Although less marked than in March, the rate of improvement in vendor performance remained solid.

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