The German wood industry is currently facing significant challenges, primarily due to a downturn in the construction sector and broader economic instability. Recent data from the Federal Statistical Office (Destatis) indicates that real (price-adjusted) incoming orders in the main construction industry declined by 0.7% in 2024 compared to the previous year. Nominally, order intake increased by 1.1% to €103.5 billion. Within building construction, residential construction experienced a real decline of 3.5%, while non-residential construction decreased by 5.8%.
This contraction in the construction sector has directly impacted the wood industry. The German Sawmill and Timber Industry Association (DeSH) reported a 17% decrease in turnover to €1.3 billion in the first quarter of 2024 compared to the same period in the previous year. Weak domestic demand for construction timber has been a significant factor contributing to this decline.
The economic climate within the wood industry has also deteriorated. The HDH economic indicator declined for the third consecutive time in January 2025, reflecting a negative business sentiment. This downturn is attributed to weak overall economic development and a continued decline in construction demand, driven by high construction costs, poor financing conditions, and inadequate funding for new projects. Notably, building permits for single- and two-family homes fell by 20.7%, and permits for multifamily homes decreased by 22.1% in the first eleven months of 2024.
The broader economic context further exacerbates these challenges. The German Economic Institute (IW) forecasts a marginal economic growth of only 0.1% in 2025, following two years of contraction. This stagnation is largely due to declines in industrial and construction sectors, with high costs for energy, labor, and materials, combined with excessive bureaucracy, posing major challenges.
In summary, the German wood industry is grappling with reduced demand from a sluggish construction sector and overarching economic headwinds. Addressing these issues requires strategic measures to stimulate construction activity and bolster economic growth.
