The mood in the residential construction sector has significantly deteriorated in April. According to the Ifo Institute, the business climate index dropped from -19.3 to -28.4 points, representing the steepest decline recorded since April 2022. The deterioration was driven both by diminished corporate expectations and a poorer assessment of ongoing business activities.
Klaus Wohlrabe, head of the Ifo surveys, commented that “geopolitical uncertainty is now affecting the housing construction sector in Germany”. He pointed out that multiple risks-including fragile supply chains and increasing financing costs-are pressing simultaneously on the building industry.
Concerns regarding potential supply shortages of essential raw materials are mounting again. In April, 9.2 percent of companies reported encountering limitations in material sourcing. This figure marks a considerable increase, as previously, the value had hovered near just one percent over the preceding two years, with basic materials being particularly affected.
While the difficulties in the broader market remain apparent, Wohlrabe noted that the situation regarding current operational business has not changed. The proportion of companies reporting fewer orders than desired remained nearly stable at 43.8 percent, and the rate of cancellations also held steady at 10.8 percent.