2026.02.0508:48:27UTC+00German Construction Slips Back into Contraction

The HCOB Germany Construction PMI experienced a decline, falling to 44.7 in January 2026, down from 50.3 in December. This shift indicates a return to contraction following a brief period of growth not seen in nearly four years. The downturn was primarily driven by accelerated decreases in both housing and commercial construction sectors. In contrast, civil engineering showed continued growth, expanding in six of the previous eight months, although at a slightly reduced pace compared to December's peak not seen in nearly fifteen years. The data also highlighted further declines in new orders due to weak demand across housing, commercial projects, and local government sectors.

However, there were some encouraging signs as employment increased for the third straight month, achieving its fastest growth since March 2022. Furthermore, purchasing activity saw a deceleration in its decline, the slowest in over three and a half years. On the downside, input cost inflation rose to a four-month high, accompanied by increased charges for subcontractors. Despite ongoing challenges, business sentiment turned optimistic for the first time since May 2025, reaching its highest level of confidence since February 2020.