German construction industry expects revenue to fall by 3.5% in 2024

The outlook for the sector remains bleak

Germany’s construction industry, according to the Hauptverband der Deutschen Bauindustrie, expects a 3.5% drop in revenue in 2024, Kallanish reports.

In 2023, the industry’s revenue in real terms decreased by 5% y/y. The association notes that nominally, this figure increased slightly, but higher purchase prices for most materials should be taken into account. The volume of orders last year fell by 4.4% compared to 2022.

The decline was particularly noticeable in residential construction, where revenue in 2023 fell by 12% y/y. The figure is expected to fall at the same level this year.

A survey conducted by the German Chamber of Commerce and Industry in early January showed that 44% of companies expect another deterioration in the situation this year, which is the most pessimistic forecast since the financial crisis of 2009. Similar conclusions are presented in a survey by the IFO economic institute.

However, a recent study conducted by ING Bank notes that Germany still has a structural shortage of housing supply, so prices may recover without a significant improvement in volumes. However, high construction costs and unfavorable housing affordability make a strong market recovery unlikely.

As GMK Center reported earlier, production in the construction sector of the European Union in January 2024 decreased by 1% compared to the previous month. Compared to January 2023, the seasonally adjusted figure increased by 0.1%. This is evidenced by preliminary data from Eurostat.