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Construction Sector Output Growth Slows to 26 percent in May

MTI-Hungary Today 2019.07.16.

Output of Hungary’s construction sector climbed 26.3 percent year on year in May, data released by the Central Statistical Office (KSH) on Tuesday show.

Output of the buildings segment was up by 27.0 percent, lifted by construction of factories and warehouses, KSH said. Civil engineering output increased by 25.7 percent, supported by road and railway projects, it said.

Headline output growth slowed from 40.1 percent in April and 67.6 percent in March. For the period January-May, construction sector output was up by 40.4 percent year on year.

In absolute terms, output stood at 361.5 billion forints (EUR 1.1bn) in May and 1,446.1 billion in January-May.

Order stock in the sector was down 8.1 percent at the end of May from twelve months earlier. Stock rose by 38.4 percent in the buildings segment but was down 19.1 percent in the civil engineering segment.

New order volume was down 1.1 percent as new orders for buildings fell by 24.0 percent and civil engineering orders rose by 11.9 percent.

Gov’t: Grow for three years

László György, a state secretary at the innovation and technology ministry, told news channel M1 that the construction industry had been growing for three consecutive years, with productivity reaching 23 percent in 2018. The sector is expected to receive orders to the tune of 25 billion forints between 2018 and 2023, he said, adding that facing that workload would require a 10 to 11 percent annual growth. The government’s investment agency had been set up to manage state orders and to “slightly curb” the order stock, he said.

“It is good to see that the bulk of orders are for warehouses and industry buildings … with roads and railways playing a significant role,” he said.

Analyst: bad spring weather could result slowdown

Commenting on the data, analyst Gergely Suppan of Takarékbank said unseasonably cold and wet weather and a higher base could both have played a part in the May slowdown in output growth. Suppan said he expected about 25,000 new homes to be completed this year, forecasting full-year output growth of around 30 percent in the sector.

Featured photo illustration by Attila Balázs/MTI