Mood among German construction companies worst in decades

The mood among German residential construction companies is more pessimistic than at any time since 1991, according to a survey by the Munich-based Ifo Institute, reported dpa.

The business climate index for residential construction fell to minus 56.8 points in December, the lowest level since surveys began nearly three decades ago, the institute announced on Wednesday.

In the previous month, the value was minus 54.4 points.

"The exceptionally weak expectations show that companies currently have no hope," said Klaus Wohlrabe, head of the Ifo surveys. "The prospects for 2024 are bleak."

Well over half of the companies surveyed (56.9%) complained about a lack of orders.

A total of 500 residential construction companies were included in the survey, which is part of the Ifo business climate for the German economy. It is based on monthly feedback from a total of around 9,000 companies from industry, services, trade and the construction industry.

"Federal government, we have a problem," commented Tim-Oliver Müller, Managing Director of the German Construction Industry Association.

The 2024 budget will probably not provide any additional funds for housing construction. "This is extremely bitter for our country and tens of thousands of tenants."

Despite the housing shortage in many cities, the amount of new construction could slump further this year, he said.

Should the government stick to its austerity programme, Müller called for the simplification of building regulations - including energy-saving requirements - and bureaucracy.

The construction industry association specifically mentioned the introduction of digital building applications and the standardization of the 16 federal states' building regulations to create a binding federal building code.

"All of this can reduce construction costs and won't cost a cent," said Müller.