Construction output in Hungary fell by an annual 20.1 percent in May, the Central Statistical Office (KSH) said on Wednesday.
Compared with April, output dropped by 20.3 percent, based on seasonally and working day-adjusted data.
Building construction fell by 24 percent compared with May last year.
In the first five months of the year, construction output was 5.6 percent lower than the same period last year.
Commenting on the data, Anita Boros, state secretary at the Ministry of Innovation and Technology, said the novel coronavirus epidemic had left its mark on the sector in May. The ministry expects that the sector will rebound from September, however, she said.
Analysts said that while the epidemic had clearly affected the sector in May, the long-term consequences were not yet clear and the next few months, with the easing of restrictions, would determine the sector’s performance for the full year.
Takarékbank analyst András Horváth said the sector rallied well in March and April, the first two months of the epidemic. The sector’s performance in June will be key to determining how well it rebounded from the setback in May, he said. The stock of orders gives reason to hope for a V-shaped recovery, he said. Meanwhile, construction in the business and industry branch were unaffected and are expected to remain so if a protracted crisis can be avoided, he said.
Pro-govt Századvég Gazdaságkutató’s Gábor Regős said the sector’s contraction in May came as a “surprise” after its relatively sound performance in April. A dearth of foreign labour, epidemic-related restrictions and uncertainty on the side of investors may have contributed to the falling numbers, he said. The government’s preferential VAT rate for brownfield investments and other investment-friendly measures may help overcome the latter, he said.
K&H analyst Dávid Németh said the stock of orders pointed to the sector staying in the red in the following period. Performance in the second half of the year will depend on the number of investments that can resume after the pandemic, he said. Another factor is the degree to which the sector can recover the work force it lost in the second quarter of the year, Németh said.
Futureal CEO Tibor Tatár said the construction sector had proven resilient against the economic effects of the epidemic. The decline in May was from a high base last year, he noted. Property development and office construction continue to boost Hungarian economy, he said.
featured image: the works of a sports centre in Nagykanizsa (illustration); via MTI/Varga György