The sentiment within the residential construction sector underwent a significant decline in April. According to the Ifo Institute’s report delivered on Friday, the Ifo Business Climate Index dropped sharply, falling from -19.3 to -28.4 points. This represents the steepest decline recorded since April 2022.
The Institute noted that both corporate expectations and the assessment of ongoing business deteriorated considerably. Klaus Wohlrabe, head of Ifo surveys, commented that “geopolitical uncertainty is now placing pressure on the residential construction sector in Germany”. He pointed out that several risks are converging on the industry, including rising financing costs and fragile supply chains.
Concerns regarding potential shortages of crucial raw materials are increasing again. In April, 9.2 percent of companies reported restrictions in material supply, a significant jump from the figure that had remained around 1 percent over the previous two years. Basic raw materials are particularly affected by these limitations.
However, Wohlrabe added that the situation concerning current business remained unchanged. While the proportion of companies reporting insufficient orders remained stable at 43.8 percent, the cancellation rate held steady at 10.8 percent.
