Germany’s construction sector is signalling a potential recovery, with September 2025 data revealing a significant surge in new orders, though underlying vulnerabilities persist. According to figures released Tuesday by the Federal Statistical Office (Destatis), the real volume of new orders rose by 7.7% compared to August, seasonally and calendar adjusted, reaching the highest level since March 2022. This marks a notable improvement, particularly given the prolonged period of stagnation and contraction experienced in recent months.
The increase wasn’t uniform, with a 1.7% rise in building construction and a more substantial 13.2% jump in civil engineering work. Over a three-month period (July-September), real orders were up 4.0% compared to the preceding quarter, suggesting a sustained, rather than a fleeting, upturn. Year-on-year, the gains are even more pronounced, with September 2025 orders up 20.7% relative to September 2024. This dramatic increase, however, is partly attributable to a lower base in the comparative period, highlighting the volatility inherent in the sector’s performance. Large-scale contracts are also recognized as a contributing factor, raising questions about the sustainability of this level of growth.
While the rise in new orders is encouraging, concerns remain regarding the broader economic context. The robust increase in nominal turnover – 25.8% year-on-year – masks underlying inflationary pressures and potentially eroding profit margins for construction firms. The real turnover figure, while positive at 5.1% higher than the prior year, provides a more nuanced – and less celebratory – picture. Furthermore, a 1.5% increase in the number of people employed in the construction sector, while pointing to some labor market recovery, underscores the persistent skills shortage within the industry.
Analysts caution that the recent uptick is unlikely to herald a complete reversal of the challenges facing the German construction industry. Rising interest rates, ongoing supply chain uncertainties and the government’s protracted debates over budgetary allocations earmarked for infrastructure projects continue to create headwinds. The influx of large orders, while boosting current figures, may not translate into a sustained period of healthy growth across all segments of the sector. Ultimately, the long-term trajectory of the construction industry will hinge on the government’s ability to provide policy stability and address structural challenges, rather than solely relying on the temporary effect of significant project contracts.