German construction slump eases in August as commercial activity grows

Germany's construction sector downturn eased significantly in August, with the purchasing managers' index rising to 48.7 from 42.1 in July, according to S&P Global survey data released Friday. Commercial activity returned to growth for the first time since July last year, though the sector remains in contraction territory below the 50 threshold. The decline in residential construction eased to its weakest level since December 2025, while civil engineering slipped back into contraction. New orders continued falling sharply amid high prices and elevated borrowing costs, with firms cutting jobs at the fastest pace since April and scaling back purchasing. Input cost inflation accelerated for the first time in four months, driven by higher oil prices. Construction firms remained pessimistic about the coming year, citing a lack of new orders, pressure on disposable incomes, high costs, and continued risks from the Middle East war. The sector's outlook stays subdued despite the modest August improvement.