German construction orders post biggest rise since 1991

Orders in Germany's construction industry surged by a record 23% in August compared with the previous month, driven by several major contracts, the Federal Statistical Office reported on Friday.

The increase, adjusted for inflation and calendar and seasonal effects, was the sharpest since records began in 1991, the office said.

Civil engineering orders rose by 31.6%, significantly outpacing the 12.4% increase in building construction.

In the less volatile three-month comparison, orders across the construction sector rose by 7.6% compared with the preceding three months.

Civil engineering again recorded stronger growth, with orders up 13.8%, while building construction saw a modest increase of 0.6%.

Construction industry revenue reached €10.9 billion ($12.2 billion) in August, up 10.1% from a year earlier in nominal terms and 4.9% when adjusted for inflation.

Employment in the sector increased by 1.5% year-on-year to 548,000 people.

Signs of recovery

"We are finally seeing light at the end of the tunnel," said Tim-Oliver Müller, managing director of the German Construction Industry Federation.

He dismissed concerns that rising demand, particularly from Germany's special infrastructure fund, would lead to disproportionately high price increases.

Müller said the industry had already increased staffing levels ahead of the recovery and was working intensively to boost productivity. 

Smaller construction companies, however, have expressed concern that they could miss out on major public contracts. The contracts were being awarded in such large packages that only a handful of major companies could compete for them, the industry has warned.

Felix Pakleppa, managing director of the Central Association of the German Construction Industry, said small and medium-sized companies still had spare capacity. In building construction, equipment was operating at just 45% of capacity, he said.