6th August 2026

Key findings:

Total Industry Activity Index at 42.1 in July
Growth resumes in civil engineering segment against trends seen elsewhere
Cost inflation slips to five-month low

The downturn in Germany’s construction sector persisted into the third quarter of the year, with building companies recording further declines in total activity and new orders in July, the latest S&P Global PMI® survey showed. A renewed expansion in civil engineering activity was one bright spot, however.

Encouragingly, there was a further easing of supply-side pressures, as input cost inflation slipped to its slowest since the outbreak of the Middle East conflict and delivery delays on purchases eased noticeably for the second month running.

The S&P Global Germany Construction PMI Total Activity Index is a seasonally adjusted index based on a single question asking about month-on-month changes in total industry activity. A reading below 50.0 signals contraction, and the further below 50.0 the faster the rate of contraction signalled.

The headline index came in at 42.1 in July, down from June’s 44.8 and its lowest for three months. The index has registered in sub-50 contraction territory throughout the year-to-date, after briefly entering growth territory at the end of 2025.

The main drag continued to come from the housing sector, which saw activity fall sharply and at the quickest rate for three months. Work on commercial building projects likewise fell at an accelerated pace. Civil engineering activity meanwhile went against the trend and recorded a renewed – albeit modest – increase, the first for three months.

July’s survey results continued to point to a lack of new orders across the construction sector. The rate of contraction accelerated since June, when it had been the weakest for six months. Panel members remarked on delayed decisionmaking among customers and a squeeze on demand from high prices.

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Falling workloads meanwhile translated into another round of job losses across the German construction sector at the start of the third quarter, to extend the current sequence of decline to six months. The latest decrease, which was partly linked by panellists to the non-replacement of staff, was more marked than that recorded in the previous survey period. The latest data likewise showed deeper cuts to builders’ purchasing activity.

Average prices paid for building materials and products continued to exhibit a strong rate of inflation in July, with surveyed firms remarking on the influence of elevated oil prices and the knock-on effects on the cost of commodities and fuel. That said, the overall rate of increase slowed further from April’s recent peak to its lowest since February.

Although delivery delays on purchases continued to be reported, they too moderated compared to the situation earlier in the war in the Middle East, with the latest deterioration in supplier performance being the weakest recorded so far this year.

Looking ahead, constructors maintained a pessimistic outlook for activity in the coming year. Expectations even ticked down slightly from the month before. A lack of activity in the housing sector and high prices were two of the main challenges facing the industry, anecdotal evidence showed.

Phil Smith, Economics Associate Director at S&P Global Market Intelligence, said, “Activity in the construction sector continues to be held back by a lack of demand, with the weakness showing up most notably in the housing sector but also in the commercial building space. We saw growth resume in the civil engineering activity sector in July, with this area remaining the main bright spot in an otherwise gloomy start to the third quarter.

“With firms reporting headwinds to growth from high prices, an alleviation of supply-side pressures is needed to lay the foundations for a recovery. We saw some signs of encouragement in July as cost inflation slowed sharply and delivery delays on building materials and products eased, but a continuation of these trends is by no means guaranteed given the volatility in global oil markets in recent weeks and continued risk of supplychain disruption. “

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