Construction volume highest since 1999, led by residential

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Figures released by Germany's Federal Statistics Office (Destatis) show that turnover in the building industry in August rose nominally by 12.4% to €6.6bn compared to last year. The last time there was a higher figure for August was 1999, when it reached €6.9bn. The building industry is expecting a further rise, particularly in residential building.

On a seasonal basis, orders fell by 2.2% from July to August 2016, and the volume of seasonally adjusted orders fell by 3.3% from the March-May period to the June-August period. Compared to the first 8 months of 2015, incoming orders in the first 8 months of 2016 rose nominally by 16.9%, and in price-adjusted terms by 15.0%.

Double-digit growth in turnover and order book

The statistics were gleaned from companies with 20 or more employees. According to the main building trade association Hauptverband der Deutschen Bauindustrie, the nominal rise in turnover was due to the fact that more workdays were available to companies in August this year than in August last year.

The industry views the present business situation as 'positive', with 90% of respondents to the Ifo Business Survey rating their situation as 'good' or 'satisfactory' and only one in ten as 'bad', which is fewer than ever before. The demand for building work remains high, according to Destatis, which points out that the 2.2% fall in the number of orders received versus the previous month, when adjusted for price, season and workdays, is not a reflection of a weakening market but a function of the very high level of existing orders.

Rise in number of building permits

All categories of building are showing growth, but the highest rate is in residential, where building companies recorded an increase in turnover and order-book of 16.7% and 20.3% respectively in August. From January until August the respective figures were 14.5% and 18.4%.

Destatis says there was also a rise in the number of permits issued. In the first eight months permits for 245,325 (new or conversion) apartments were issued - 25.1% more than in the same period last year and the highest recorded this century. Demand is particularly high for multi-family houses, for which 108,850 permits were issued, a rise of 27.5%.

Critical voices in the industry remain sceptical about whether enough is being done to make a noticeable medium-term impact on the housing crisis, given the high level of issuance for permits for conversion of existing apartments.