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German construction sales to grow by 4 pct this year - associations

Kitco News

BERLIN, Jan 18 (Reuters) - German construction companies expect sales to grow by 4 percent this year, reaching their highest level since 1995, industry associations said on Thursday, suggesting the sector will continue to propel growth in Europe's biggest economy this year.

Germany is enjoying a construction boom due to higher state spending on roads and bridges, increased company investment in buildings, and a real estate bonanza.

The construction boom has been encouraged by the European Central Bank's ultra-low interest rates, a growing urban population and high immigration over the past five years.

The ZDB and HDB construction associations said in their joint forecast that nominal sales would rise by 4 percent to 117.2 billion euros in 2018, close to levels last seen during the boom times following unification and the economic upswing in East Germany in the mid-1990s.

"Construction companies are confident about the year 2018," said Peter Huebner, president of the HDB association, which represents large industrial construction firms such as Hochtief . The ZDB association includes more than 35,000 small- and medium-sized firms that form the backbone of Germany's construction sector.

With prices expected to rise by 3.5 percent this year in the construction sector, however, real sales are expected to grow by only 0.5 percent to reach 98 billion euros ($120 billion), the associations added.

Employment in construction is expected to rise by 15,000 to 820,000 people, although a growing number of companies are struggling to find skilled workers, they added.

Construction was one of the main growth drivers last year when the euro zone's largest economy expanded by a calendar-adjusted 2.5 percent, the strongest rate since 2011. For 2018, the Ifo economic institute has forecast 2.6 percent growth.

($1 = 0.8185 euros)

(Reporting by Michael Nienaber; Editing by Gareth Jones)

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