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Germany’s construction sector contracted further in May largely due to the supply chain bottlenecks, survey results from IHS Markit showed on Friday.

The construction Purchasing Managers’ Index fell to 44.5 in May from 46.2 in the previous month. This was the lowest reading since February, when the sector was impacted by a bout of severe wintry weather.

There were marked decreases in activity across both the commercial and civil engineering categories. Housing activity continued to show a more resilient trend but was in negative territory.

Several constructors reported taking on less new work in May, linked to raw material shortages and general capacity constraints. In May, more companies logged longer lead-times on inputs due to shortages across supply chains.

Cost inflationary pressures increased further in May with input prices rising at a record rate for the second month running.

Lower activity levels were reflected in a further decrease in employment at constructors in May. Staffing levels dropped for the fourth straight month.

Constructors’ expectations for activity over the next 12 months turned more pessimistic in May, taking them to the lowest overall for five months.


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