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Construction industry continues to shrink

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Construction industry continues to shrink
Photo: DPA
11:41 CET+01:00
The Association for the German Construction Industry (HDB) says it expects overall turnover to shrink by one percent in 2011, just as it did in 2010. But individual branches of the industry will also prosper.

According to HDB boss Heiko Stiepelmann, 2011 will be another good year for home construction, with a four percent rise in turnover expected. "The income expectations are positive. Unemployment is sinking, which helps a lot," Stiepelmann said. Interest rates are low, which also encourages the housing market.

The German real estate market has recovered well from the financial crisis, and Stiepelmann says that flats are now considered solid investments again. He pointed out that Germany was also never affected by the property bubbles that developed in the US, Britain, Ireland and Spain.

But in the area of public building, the construction industry is facing a "big, fat minus" in 2010, according to Stiepelmann. Turnover shrank by between one and two percent last year, and is expected to shrink more next year, as local councils around the country are still strapped for cash.

Commercial construction has proved difficult to predict, Stiepelmann says. This branch shrank by as much as five percent in 2010, following the 2009 recession, but the unexpectedly healthy recovery in the German economy has dragged commercial construction with it. But is unclear whether the modest increase in incoming orders will be enough to push turnover into the black in 2011.

DAPD/bk

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