Construction industry: Why the construction industry is so important for the German economy - PDF - Figures, data and facts about the construction industry

• You can find free access to the entire document “Construction Industry in Germany” at the bottom of this blog
• Further topics on public construction and building permits, housing construction and the main construction industry in Germany are currently being worked on.

🔨 Importance for the German economy

The importance of the construction industry for the German economy can hardly be overestimated, as it is a fundamental pillar of economic stability and growth. In 2022, the construction industry contributed 5.7 percent to gross value added, and in 2021 it also contributed more than five percent to gross domestic product (GDP). These figures underline the central role played by the construction industry and therefore problems in this sector inevitably lead to macroeconomic challenges.

💸 Construction costs and investor confidence

High construction costs, a key problem in the sector, have increased by 40 percent since the pandemic. Combined with a rise in interest rates, this has led to a loss of confidence from investors. According to a report from the Financial Times, which quotes Klaus Wohlrabe from the Ifo Institute, the situation in the construction sector appears to be becoming increasingly precarious, resulting in a continuous downward trend.

👷 Political response measures

Politicians have recognized the difficulties and tried to react. A glimmer of hope is offered by a 14-point plan to stimulate the construction sector , unveiled in September and seen by industry representatives as a good start, but not a comprehensive solution. In addition, a pact was recently concluded between the federal and state governments to accelerate planning processes in order to make building in Germany easier. However, no noticeable improvements are expected until 2024.

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🌍 International concern

The crisis in the German construction industry has now also brought international media onto the scene, warning of a possible “total collapse” that could have a domino effect on the entire European economy. Germany is in a precarious position in Europe: in comparison, real estate prices are falling the most here, while construction costs are rising faster than elsewhere, and the number of construction contracts has experienced deeper declines than in other EU countries.

🛠️ Future developments and strategies

Despite these dire predictions, construction companies and policymakers are eager to develop strategies to boost the sector. Various levers are being considered to improve the situation. These include tax incentives, investments in infrastructure, subsidies for energy-efficient and sustainable construction as well as deregulation measures to reduce bureaucratic hurdles and speed up planning and approval processes.

Distribution of gross value added in Germany by economic sector in 2022 - Image: Xpert.Digital

🏗️📉 Overview of the economic importance of the construction industry

The crisis in the construction sector is seen as part of the overall economic problem that is currently plaguing Germany. After all, the construction industry is one of the most important sectors in the country: in 2022, the construction industry accounted for 5.7 percent of gross value added.

It is therefore not surprising that the crisis in the construction sector is accompanied by an overall economic crisis, because developments in the construction industry also affect various other sectors. Some industries dependent or affected by it:

🏭 Building materials industry

The construction industry is an important buyer of building materials such as cement, steel, wood, glass and much more. A decline in demand in the construction industry can have a direct impact on building material manufacturers.

🖊️🏛️ Architecture and engineering offices

The planning and implementation of construction projects requires specialists from the fields of architecture and engineering. A decline in construction may mean lower demand for these offices' services.

🛠️🏗️ Machinery and equipment industry

The construction industry requires an extensive range of machinery and equipment such as cranes, excavators, construction vehicles, etc. A decline in the construction industry may result in lower demand for this type of equipment.

🏠🏘️ Real estate industry

The construction of new properties, be it residential or commercial, has a direct impact on the real estate industry. A decline in construction may affect the availability of property listings and impact the property market.

🛠️👷 Craftsmen and construction industry

In addition to construction companies, tradesmen such as electricians, plumbers, painters, carpenters, etc. also depend on the construction industry. A decline in construction may result in lower demand for their services.

🧹🔧 Service sector

With the construction of new buildings, new opportunities for services such as renovation, cleaning, facility management, etc. arise. A decline in construction may also affect these services.

☀️🔋 Solar industry

An example of an industry that is closely linked to the construction industry is the solar industry. Expanding renewable energy requires the installation of solar panels and other solar-powered infrastructure, which depends on construction. If the construction industry stagnates, this can also affect the expansion of renewable energies.

💼📈 Construction = stability of an economy

Therefore, construction is a significant sector of the economy due to its strong connections with other industries and is an important indicator of the economic growth and stability of an economy.

📣 Similar topics

• 🚧 Building materials industry: Impact on cement, steel, wood and more
• 🏢 Architectural and engineering firms: Lower demand for services
• 🚜 Machinery and equipment industry: decline in demand for construction vehicles
• 🏘 Real Estate Industry: Availability of real estate offers
• Tradesmen and Construction: Impact on Electricians, Plumbers, Painters, etc.
• 💼 Service sector: affecting renovations, cleaning, etc.
• ☀️ Solar industry: expansion of renewable energies affected
• 💔 Upswing at risk: crisis in the construction sector
• 📈 Economic growth: Importance of the construction industry
• 🌍 Macroeconomic problem: connection to the construction sector

#️⃣ Hashtags: #Construction sector #Construction materials industry #Architecture #Machine industry #Real estate

🏗️ Digitalization in the construction sector 🛠️

🔨 Implementation of new technologies

In this context, digitalization in the construction sector also plays an important role. Implementing Building Information Modeling (BIM), digital project management tools and platforms, and advanced technologies such as 3D printing could improve productivity and reduce costs. In addition, it is essential to promote the education and training of workers in the construction industry in order to meet the requirements of modern construction technologies and methods.

🌿 Sustainability in the construction industry 🌱

🍃 Use of environmentally friendly materials

Furthermore, the issue of sustainability is playing an increasingly important role in the construction industry, with energy saving measures and the use of environmentally friendly building materials being promoted. These trends are not only in line with global environmental efforts, but can also lead to long-term cost savings in building operations and maintenance.

🏘️ Housing shortage in big cities 🌆

🏠 Creation of new living space

However, Germany also faces a crucial challenge here: the lack of housing, particularly in large cities and metropolitan areas, is exacerbating the problem. The creation of new housing is therefore of great importance in order to reduce both social and economic tensions. The housing construction offensive in particular sees an opportunity to address the construction crisis and at the same time promote social housing in order to create affordable living space for broad sections of the population.

🤝 Dialogue between the actors 🗣️

✔️ Sharing best practices

In many places, dialogue between politics, business and society is seen as the key to solving the current crisis. Through joint efforts and the exchange of best practices, a way out of the misery can be found. This also includes closer cooperation at European level to learn from the experiences of other countries and respond together to challenges.

🔄 Multidimensional strategies for the construction sector ⚙️

🛠️🌱🏗️ Long-term change and stability

The crisis in the German construction sector is having a profound impact on the overall economic situation and a variety of approaches are necessary to overcome this. From short-term measures to stimulate the economy, to medium-term changes to a digitalized and sustainable construction industry, to long-term solutions to the housing problem, numerous strategies must be considered and implemented in order to bring not only the construction industry but also the German economy as a whole back together to bring a more stable path.

You can find free access to the entire “Construction Industry in Germany” document below!

12.3 percent (476 billion euros) of Germany's gross domestic product (total value of all goods and services produced) was used for construction work in 2022. The GDP in the same year was around 3.87 trillion euros. At the same time, the construction industry generates 5.7 percent of the total value added in Germany.

The construction industry in Germany comprises a significant sector of the German economy. With 5.8 percent of all employed people, the construction industry is an important employer in the country. In addition to classic house construction, infrastructure projects such as roads, bridges and transport systems are also implemented by the construction industry. In addition, public buildings such as schools, hospitals and administrative buildings are built by construction companies.

The construction sector will continue to play an important role in the future, as many buildings need to be renovated and modernized. Demographic change also requires the construction of more nursing homes and retirement homes. Sustainable and resource-saving construction is also becoming increasingly important in order to comply with environmental standards.

The construction industry not only consists of classic civil engineering, but has also become increasingly important in the area of ​​landscaping in recent years. Technological developments such as Building Information Modeling (BIM), the use of drones and 3D printing are changing the construction industry and opening up new opportunities. Nevertheless, the construction industry remains dependent on the overall economic situation.

Share of construction investments in the use of gross domestic product in Germany in 2022 - Image: Xpert.Digital

🏗️📈 A high proportion of construction investment in gross domestic product (GDP)

A high share of construction investment in gross domestic product (GDP) is important for several reasons and can be considered one of the most important indicators of a country's economic growth and stability. Here are some reasons why a high share of construction investment in GDP is so significant:

🏛️ 1. Infrastructure

The construction and construction sector plays a crucial role in the development of a country's infrastructure. Roads, bridges, railways, airports, ports and other public facilities are necessary to enable the movement of goods and people and to promote trade. Adequate and modern infrastructure is important for the competitiveness of an economy and has positive effects on the entire economic system.

👷 2. Employment

The construction industry creates a large number of jobs. Investments in construction initiate new construction projects, which in turn leads to increased demand for labor. This helps reduce unemployment and has a positive impact on people's income and purchasing power. A high proportion of construction investments can therefore contribute to strengthening the labor market.

💼 3. Multiplier effect

Construction investments have a strong multiplier effect on the economy. When investments are made in construction, not only are direct jobs created in the construction industry, but indirect jobs are also created in the supply and service sectors. Companies that provide building materials, equipment, office supplies and other goods for construction projects also benefit from these investments. In addition, increased economic activity and employment will boost consumption, which in turn has a positive impact on other industries.

📊 4. Economic growth

Construction investments are an important driver of economic growth. The construction of new residential and commercial properties and other infrastructure projects will expand production capacities and increase the need for building materials, machinery and other goods. This leads to an increase in the country's total production and GDP. A high proportion of construction investments can therefore stimulate economic growth and have positive effects on other sectors.

🏘️ 5. Housing and public facilities

An adequate supply of housing is a fundamental requirement for the population. Investments in the construction of residential properties help to meet housing needs and provide people with adequate accommodation. In addition, public institutions such as schools, hospitals, sports facilities and cultural institutions are essential components of a well-functioning society. High construction investments enable the expansion and modernization of these facilities.

🏗️📈 Construction investments: fuel for economic growth and stability

A high proportion of construction investment in GDP has a positive impact on the overall economy. It promotes employment, economic growth, infrastructure development and contributes to improving the quality of life. Therefore, the construction and construction sector is often considered one of the most important and meaningful indicators of a country's economic development.

📣 Similar topics

• 🚧 The importance of construction investment for GDP
• 🧱 The influence of high construction investments on the economy
• 💼 Construction investments and strengthening the labor market
• 💰 The multiplier effect of construction investments
• 📈 Construction investments as a driver of economic growth
• 🏘️ Importance of construction investments for the housing market
• 🏗️ Infrastructure development through construction investments
• 👨‍⚕️ Construction investments and public facilities
• 🌱 Sustainability in construction investments
• 🌍 Construction investments and global competitiveness

#️⃣ Hashtags: #Construction investment #Economic growth #Infrastructure #Employment #Quality of life

Figures, data, facts and background: Construction industry in Germany – Image: Xpert.Digital

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🛠️ The construction industry as a fundamental branch of the economy

The construction industry is a mainstay of the German economy and can be fundamentally divided into two areas: the main construction industry and the ancillary construction industry. The construction industry primarily deals with massive construction projects such as civil engineering. This includes the construction of residential and non-residential buildings, bridges, roads and other infrastructural elements. In contrast, the construction industry, often also referred to as the finishing industry, includes all those activities that are necessary to make a building functional and habitable. These include, for example, construction installation, roofing work, carpentry as well as painting and varnishing work.

📈 Economic importance and growth impulses

With a significant contribution to gross value added, the construction industry is a key driving force of economic prosperity in Germany. Due to demographic developments and increasing urbanization alone, housing construction is becoming increasingly important to society. Given the shortage of housing in metropolitan areas, the federal government is pursuing ambitious goals to defuse the tense situation. It plans to significantly promote housing construction and significantly increase the annual construction of new apartments.

🚧 Challenges and market development

However, statistical data on the development of building permits suggests that the set targets are unlikely to be achieved, highlighting the challenges in the construction industry. Nevertheless, the construction volume - an indicator of the sector's economic performance - is constantly increasing. The term includes the entirety of all construction work, including maintenance, which does not directly contribute to increasing the value of the property.

🇪🇺 The role of Germany in the European context

A special feature of the German construction industry is its leading role in Europe. With a construction volume of around 380 billion euros in 2020, Germany outperformed other major European economies and consolidated its position as the largest construction market on the continent. This is also reflected in the steady growth in sales and in the number of people employed in the construction industry. The economic sector has recorded an upward trend in the creation of new jobs over the years and has therefore made a significant contribution to labor market development.

👷‍♀️ Gender diversity in the construction industry

Although there is still a clear preponderance of men in the industry, a slowly increasing trend can be observed in the proportion of women. The increasing employment of women in construction indicates a slow but significant shift towards greater gender diversity in the industry. Nevertheless, there is definitely still a lot of room for improvement when it comes to the proportion of women in the German construction industry.

💼 Employment and economic indicators

The employment situation in the construction industry is also an indicator of the economic condition of the construction industry as a whole. The number of full-time employees is an important source of information about the structure of employment relationships and shows companies' confidence in a constant and stable order backlog.

🌍 The position of German construction companies on the global market

A look at the global markets also illustrates the strength of the German construction industry through the presence of German companies like Hochtief on the world stage. Hochtief, as an internationally operating group, is one of the world's largest construction companies and is characterized by considerable sales and a leading role in the international construction business. This demonstrates the global influence and economic importance of the German construction industry.

The largest construction company in the world in terms of sales is China State Construction Engineering Corp. Hochtief was the only German company among the 15 largest construction groups worldwide to reach twelfth place in 2021 with sales of around $29 billion.

💹 Challenges and prospects for the future

The future of the construction industry in Germany faces major challenges: increasing environmental regulations, the need for sustainable construction, the integration of new technologies and dealing with a volatile market are just some of the challenges that the industry has to face. In addition, topics such as digitalization, resource efficiency and innovative construction technologies are playing an increasingly important role in making the construction industry more efficient and sustainable.

🏗 Summary and outlook

The construction industry in Germany is a complex and dynamic sector that has a significant influence on the economy and is continually growing in importance. With the emergence of new construction technologies and the increasing demand for residential and commercial space, the industry is faced with a variety of opportunities and challenges that will need to be mastered in the future.

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• 🏢 The German construction industry: A leading role in Europe
• 💡 Future-oriented construction technologies: opportunities and challenges
• 🌍 Global influence: Germany's construction industry in an international context
• 👷‍♀️ More gender diversity in construction: slow change
• 🏗️ Increasing construction volume: Economic performance of the sector
• 📈 The German construction industry is on course for growth
• 🏢🌍 A look at the markets: Strength of the German construction industry
• ♻️ Sustainable construction: challenges and needs
• 💼 Employment situation in the construction industry: indicator for the construction industry
• 🏢🌱 The future of the construction industry in Germany: opportunities and tasks

#️⃣ Hashtags: #Construction industry #Future construction #Employment situation #Sustainable construction #Construction technologies

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