German construction industry significantly raises growth forecast for 2019

Germany’s HDB construction industry association has raised its growth forecast for revenues from 6.0 percent to 8.5 percent, the HDB announced on Monday.

The construction sector would do “better than expected at the beginning of the year,” said HDB President Peter Huebner. “The construction industry will thus remain a real pillar of the German economy in the medium term.”

Revenues of construction companies in Germany with 20 and more employees increased by 14.3 percent in the first quarter of 2019 while incoming orders even increased by 17.8 percent, according to HDB.

At the same time the sector had the highest order backlog ever measured with 53 billion euros (59.6 billion U.S. dollars) at the end of March.

“So all traffic lights at the construction site are still green. We will continue to support the economy as a whole in the current year,” said Huebner.

As a result, employment in the sector in 2019 would also continue to rise by 20,000 to 857,000, the HDB noted.

In order to find workers, the German construction industry had also fallen back on the wider European labor market for “many years”, Huebner said, adding that the share of foreigners in the sector who were subject to social security contributions would “approach the 20 percent mark.”

The association also expects the boom in the sector to continue in the coming year, although at a slightly slower pace, and forecasted a nominal sales growth of 5 to 6 percent for 2020.

Looking at the public debate about affordable housing and the introduction of a cap to rents in major German cities, Huebner warned politicians against “jeopardizing the confidence of construction companies in the future.”

Last week Chancellor Angela Merkel promised 5 billion euros at the meeting of the German tenants’ association (DMB), which will be invested in social housing construction during this legislative period.

The goal of German politics is to build 375,000 new apartments in Germany every year. According to the HDB, 286,000 new apartments were built in 2018, and 300,000 apartments are expected for the current year.