Germany is being watched worldwide as the most successful large European country in halting the spread of the virus, thanks to a massive testing programme. Three weeks after the decision of the federal and state governments to gradually withdraw the coronavirus restrictions imposed in March, the end of the lockdown in Germany was largely completed in the first week of May.
On 6th May, Chancellor Merkel, commenting that “we have passed the first phase of the pandemic”, together with the representatives of the different states of Germany, announced that shops, factories and many other businesses could open again largely without restriction. However, a week later alarm bells are being sounded with the announcement that infections have accelerated again.
The German timber trade federation GD Holz said wholesalers had not at the time been significantly affected by the pandemic. Whether this situation would continue depended on the extent of contraction in the construction sector. But irrespective of that, for small to medium sized timber enterprises the situation was described by GD Holz as ‘catastrophic’.
Although DIY outlets had been allowed to remain open in some parts of the country and hardware stores continued to serve B2B customers, many other German retail and other consumer-facing businesses came to a complete standstill in the second half of March and in April. Around 85% of furniture companies in Germany were operating only on a part time basis during that period.
Key issues now are the speed at which companies can gear up operations now they are coming out of lockdown, given massive disruption to supply chains and order books, and the possibility of lockdown measures being reintroduced in the event of a second wave of the virus.
A lot of damage has already been done. According to IHS Markit survey results published on 7th May, Germany’s construction activity contracted at the steepest pace in more than ten years in April due to the disruptions caused by the pandemic.
The headline construction PMI fell to 31.9 in April from 42.0. Although a less dramatic decline than in many other European countries (see next story), this was the lowest reading in Germany since the series-record low of 28.9 in February 2010, when severe bad weather had exacerbated an ongoing slump in activity caused by the global financial crisis.
PMI data showed sharp falls in activity across each of the three broad construction categories – commercial, civil engineering, and homebuilding – monitored by the survey.
It also showed that new orders at German constructors fell at the sharpest rate in more than two decades.
Despite falling demand for inputs, supplier delivery times to the German construction sector continued to lengthen in April. Confidence towards future activity remained firmly in negative territory during the month.
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