The strong influence of the construction industry on the cyclical fluctuations of the economy as a whole (despite a relatively small share in GDP of ca. 10%) and the great interest in detailed forecasts necessitate exhaustive sectoral analyses and a regular up-dating of pronouncements on business-cycle developments and the medium-term tendencies in terms of value (construction investment, construction volume) and quantities (housing completions).
The forecasts of construction activity are made using a mixture of methods consisting of:
The analysis and forecasting of construction activity is based on:
The initial data for a differentiated forecast of construction activity divided into subgroups as well as according to residential, commercial and public construction must in some instances be estimated by the Ifo Institute. On this basis, consistent forecasts of value and quantities (construction investment and volume; completions in residential and non-residential construction) are prepared for 2008/2009. They are regularly discussed in the working group for construction and housing prognostics and at the annual Ifo Industry Colloquium.
After a weak phase lasting more than 10 years, real construction investment has been increasing since 2006 (+4.3%). However, already in 2007 residential construction displayed considerable weaknesses, and in 2008 and 2009 investment in this sector will stagnate. In contrast, the development of demand of commercial and public commissioners continues to be positive. However, confidence indicators have already been declining for a year.
The forecasts for the construction sector, which are reported regularly in ifo Schnelldienst, are also used in the Joint Economic Analysis of the German research institutes and in the annual forecast publication for Germany, the ifo Bauvorausschätzung Deutschland. They are also the basis for the economic forecasts for the construction-related industry branches in the regular reports Branchen special as well as for the German contribution, supplied by Ifo, to the forecasts of European construction activity (EUROCONSTRUCT).
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