Construction Sector in Hamburg Takes a Slight Dip, Despite Inflation-Adjusted Growth
In the first nine months of 2023, the Hamburg main construction sector reported a value of approximately 1.9 billion euros in incoming orders. This figure represents a 7.2% increase compared to the same period last year, according to Statistics North. However, when factoring in inflation, the sector experienced a 1.6% decrease.
The building construction segment witnessed a 10.6% drop in value after adjusting for inflation. Conversely, the civil engineering sector demonstrated an improvement of 14.2%, particularly in areas like other public civil engineering projects such as rail infrastructure improvement and bridge construction, where turnover soared by 42.5% year-on-year.
Larger companies in the main construction industry reported a turnover of around 1.75 billion euros during the first three quarters of 2023, marking a 9% increase compared to the previous year. Nonetheless, despite the positive growth trends in prices, the price-adjusted turnover barely changed, and there was a significant fall of 9.1% in residential construction's turnover after inflation adjustments.
Construction Trends and Inflation Impact
Based on recent statistics and studies, there are several trends and impacts affecting the construction sector, particularly the inflation effects, as follows:
- Germany's Construction Activity:
- Overall trend: Construction activity in Germany has been gradually declining, but at a slower rate than previous months, with the HCOB Germany Construction PMI Total Activity Index at a 20-month high of 42.5 in January 2025[1].
- Employment and purchasing: Building companies in Germany maintained their retrenchment, reducing both employment and purchasing activity. The demand downturn in supply chains resulted in minimal price increases for construction materials and products[1].
- Eurozone Construction Activity:
- Eurozone trend: Despite a 33-month decline, January 2025 marked the softest contraction since February 2023 for the Eurozone construction sector. The HCOB Construction Sector PMI improved slightly but remained in contraction territory, with Italy driving the index up while Germany and France dragged it down[5].
- Inflation Effects:
- Price growth: The slow growth in material and subcontractor prices is a positive factor. However, broader economic challenges and rising global protectionism put stress on the construction sector, causing structural issues[3].
- Hamburg-Specific Trends:
- Leasing activity: Hamburg sees a positive development in leasing activity, as evidenced by the Westfield Hamburg-Überseequartier, expected to open in April 2025, with high pre-letting rates (94% as of December 31, 2024)[4].
Conclusion
The construction sector in Hamburg faces varying trends, with the larger companies reporting an increase in turnover after the 9% growth during the first nine months of 2023. Despite these positive signs, the sector is still in decline, and inflation adjustments have minimal impact on the turnover growth. As always, ongoing analysis of various factors affecting the construction sector is necessary to study its dynamic nature and potential future developments.
[1] (Source 1) [2] (Source 2) [3] (Source 3) [4] (Source 4) [5] (Source 5)
