According to the ifo Institute, sentiment in Germany's residential construction sector deteriorated further in June, with the business climate index falling from -29,5 to -31,0 points. Companies rated both their current situation and their outlook for the coming months as worse than in the previous survey.
Expectations fell to their lowest level since March 2025, ifo reported. "Hopes for a gradual recovery have suffered another setback," said Klaus Wohlrabe, head of ifo surveys, adding that "many companies currently see no signs of a sustained revival in residential construction."
Operational pressure remains high. The share of firms reporting a shortage of orders, a lead indicator for future output, rose from 42,2% to 43,7%, according to ifo. The cancellation rate stayed elevated at 11,4%, while 9,7% of companies again reported bottlenecks in key input materials, pointing to lingering supply-side strain alongside the demand weakness.
Wohlrabe noted that companies continue to struggle with weak demand despite a rise in building permits, a lag indicator that typically signals future project starts. He added that a decline in cancellations alone would not offset the shortfall in new orders and would therefore not mark a turning point for the sector.
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