Construction in Germany: Slower growth ahead

Euler Hermes forecasts a +2% growth rate for the German construction sector in 2015, after a +3% growth in 2014. This positive trend is set to continue thanks to robust demand in the residential and private housing segments, supported by net migration inflows and a rising rate of urbanization.

The slight deceleration is explained by: (i) uncertainty about the level of public spending; (ii) potential slow down in housing prices - in the wake of modest growth of disposable income; and (iii) a more limited effect of low interest rates.

Profitability (EBITDA over net sales) of companies in the construction sector is expected to remain stable at 5.9% in 2015. The positive effect of lower energy prices is entirely offset by higher personnel costs. Insolvencies will continue to decrease but less rapidly (-3% in 2015) totalling 3,850 cases in 2015.

Construction in Germany: Slower growth ahead - Report