Business expectations deteriorate significantly
Material bottlenecks have again increased significantly in the construction sector. Surveys by the Ifo Institute show that expectations in the construction sector have fallen sharply. In April, 54.2 percent of companies in the building construction sector were affected by supply bottlenecks. In the previous month, only 37.2 percent reported this. In April, 46.2 percent of companies in the civil engineering sector were affected by supply bottlenecks. This compares with 31.5 percent in March. Ifo researcher Felix Leiss says that these are highs since the beginning of the time series in 1991.
At the same time, business expectations deteriorated considerably. According to the Ifo Institute, minus 46.9 points in building construction was the lowest level since 1991, while minus 48.6 points were recorded in civil engineering.
High energy prices threaten production of construction materials
“Russia and Ukraine are important suppliers of construction steel, and there is now a shortage here. For bitumen – needed for road construction and waterproofing – there are further distortions,” explains Leiss. He adds that the production of many construction materials is extremely energy-intensive. Therefore, according to Leiss, the increased prices in energy sources pose a threat to domestic production. They may also lead to further price increases in construction materials.
Increased order cancellations
“For ongoing projects, the question is to what extent cost increases can be passed on. New projects are hardly calculable. On the other hand, interest rates for financing are rising for builders,” says Leiss.
Therefore, according to the institute’s statement, more orders are being canceled. In April, 7.5 percent of building builders said this was the case. A mere 4.6 percent did so the previous month. Among civil engineering contractors, 9.3 percent reported order cancellations in April. In March, the figure was 3.9 percent.