German construction companies expect sales to grow by 4% 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% to €117.2-billion 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% this year in the construction sector, however, real sales are expected to grow by only 0.5% to reach €98-billion ($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%, the strongest rate since 2011. For 2018, the Ifo economic institute has forecast 2.6% growth.