German Construction Activity Contracts the Most in Over a Year

The S&P Global Germany Construction PMI plunged to 42.1 in April 2026, a sharp drop from 48.0 in March and the lowest level since March 2025. The steep decline in total activity at the start of Q2 was driven by the housing sector, where residential project work fell at the fastest pace in over a year. Commercial activity also suffered its steepest contraction in 17 months, while civil engineering activity remained virtually flat after five consecutive months of growth. New orders fell at the fastest rate in more than a year, and job cuts accelerated to their quickest pace since May 2025, with firms blaming customer hesitancy, weak economic conditions, and persistent price pressures. Input cost inflation reached its highest since May 2022, and supplier delivery times lengthened the most since July 2022, largely due to disruptions from the Middle East war.

The S&P Global Germany Construction PMI rose to 48.0 in March 2026 from 43.7 in February, signaling a slower contraction in total activity. Housing activity fell at its shallowest rate so far this year, while civil engineering expanded at an accelerated pace. Commercial construction remained the weakest segment, with only a slight easing in its decline. Employment and purchasing also dropped more slowly than in February. Meanwhile, new orders fell at the fastest pace since July 2025, reflecting softer demand and cost pressures linked to the Middle East conflict. Input price inflation jumped to a record monthly increase, the highest since October 2022, driven by higher energy, fuel, and transport costs. Supply chain delays worsened, with building material lead times at their longest in almost three-and-a-half years. Business expectations fell sharply, turning negative for the first time in 2026, as constructors cited rising costs and weaker demand as major concerns.

The HCOB Germany Construction PMI fell to 43.7 in February 2026 from 44.7 in January, signaling a further contraction at the start of the year. Housing and commercial construction declined sharply, while civil engineering continued to expand for the fourth consecutive month, albeit at a slower pace than in December. New orders fell at the fastest rate in six months, reflecting weak demand and some disruption from severe winter conditions. Employment in the construction sector decreased, ending a three-month sequence of job creation, while purchasing activity dropped at the fastest pace in six months. Supplier delivery times lengthened to the greatest extent in three years, and input price inflation accelerated to a five-month high. Despite these challenges, business expectations for the next 12 months rose to the highest level since February 2020, supported by planned infrastructure projects and hopes of a milder winter.