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Global Economy

Many cancellations in the construction industry

According to studies by the Munich ifo Institute, an unusually large number of projects are currently being canceled in the German construction industry. In building construction, 11.5 percent of companies were affected by cancellations in July after 13.4 percent in May. In civil engineering, nine percent of firms faced these problems in June, slightly up from 8.8 percent in May.

"The magnitude is comparable to the corona shock in spring 2020. This time we are seeing cancellations in residential construction particularly frequently. However, the order books are still full on average," says ifo researcher Felix Leiss.

There is still a lack of material

There are still major problems due to material bottlenecks. In June, 47 percent of building construction companies were affected by this problem, compared to just under 57 percent in May. In civil engineering, the share fell from 45 to 40 percent.

"These bottlenecks are only slowly resolving. In some cases, there are rapid price increases as a result of the scarcity. High energy prices are also driving up prices for many building materials," adds Leiss. On average, the companies expect that the bottlenecks will continue for almost nine months.

"Companies have to pass on the higher prices for materials and fuel to customers, and so construction prices continue to rise rapidly. However, builders also have to bear the higher interest rates," says Leiss. In residential construction, there is also uncertainty about future funding opportunities. "This means that some projects have to be reconsidered," explained the expert.

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