The Federation of German Construction Industries (HDB) is lowering its revenue forecast for the year due to renewed cost increases stemming from the conflict in Iran, coupled with slow progress in the disbursement of capital from the special state fund. According to the report, the construction sector is now expected to achieve only one percent growth in revenue this year, significantly down from the previously predicted 2.5%, based on the results of the industry’s semi-annual economic survey.
The survey findings highlight severe strain across the sector. Eighty percent of surveyed participants stated that the closure of the Strait of Hormuz was impacting their businesses, while almost all respondents were affected by rising prices for energy and raw materials. Approximately twenty percent reported current project delays. On the outlook, only 13 percent anticipate an increase in earnings, compared to 43 percent who expect a decline. The HDB noted that three-quarters of companies may struggle to pass these increased costs onto their clients, leaving them burdened with high expenses for materials and diesel.
Furthermore, the €500 billion special debt allocated for infrastructure and climate protection is not flowing into the construction industry as anticipated. Tim-Oliver Müller, the HDB’s CEO, commented to the newspaper that the initial optimism regarding a swift positive impact from the special fund on orders and revenue has not materialised this year. Stronger effects had been expected, particularly in civil engineering. From January to July, only 33 percent-amounting to €7.3 billion-of the designated funds for transport infrastructure have been disbursed. Even less is being allocated to the “Building and Housing” investment sector, which includes housing development support programs, where only four percent usage was reported.
Despite these challenges, the construction companies expressed a willingness to expand their workforce. Müller stated that between 10,000 and 12,000 more employees are expected to be employed in the construction industry this year compared to the previous year. He also mentioned that monthly positive economic signals could emerge, perhaps as early as June. However, he cautioned that it remains uncertain whether these positive flashes will translate into a sustained trend, noting that he is maintaining a more cautious stance than he was earlier this year. The HDB conducted this economic survey from June 9th to July 10th, with the majority of participating companies based in Lower Saxony, Bremen, and North Rhine-Westphalia.
