The sentiment within the German housing construction sector saw a slight improvement in July. According to the Munich-based Ifo Institute, the business climate index rose from -30.6 to -29.3 points. Companies assessed their current situation more positively, though their future expectations cooled slightly and remained pessimistic. Klaus Wohlrabe, head of the Ifo surveys, noted that the increase in building permits appears to be slowly reaching the industry, but cautioned that a broad recovery still requires significant progress.
The demand situation also shows minor signs of easing. The share of companies reporting a shortage of orders decreased from 43.7% to 41.2%. However, this slight improvement was countered by a noticeable rise in project cancellations; 13.1% of companies reported postponed projects, up from 11.4% in the preceding month.
Regarding material supply, conditions have eased somewhat. The percentage of companies experiencing bottlenecks in key raw materials fell from 9.7% to 8.5%. Wohlrabe summarized the situation, stating that while the order outlook is gradually improving, the increasing number of project cancellations highlights the persistent fragility of the residential construction recovery.
