Output of Hungary’s construction sector rose by 36.8 percent in August from a year earlier, the Central Statistical Office (KSH) reported on Tuesday.
source: ksh.hu
KSH noted that the jump came from a low base. Output of the building segment was up 46.8 percent while output in civil engineering rose by an annual 24.1 percent. In a monthly comparison and adjusted for seasonal and working-day effects, output rose by 9.8 percent after a 1.9 percent drop in July.In January-August, output was up an annual 27.9 percent.
Government reaction
Commenting on the data, Economy Minister Mihály Varga told public television that rapid growth in the industry was expected continue, noting the sector’s stock of orders at the end of August had expanded by an annual 90 percent. He said a large part of the exceptionally high figure was down to state and local government investments such as buildings for housing education, culture and health care.
Varga noted that the number of employees in the sector had risen by 4,000 in the past year, but now a question mark hung over the sector — given the expanded stock of orders — as to whether it had reached full capacity or not. He added that one solution to the problem could be wage increases in the construction industry. He said the government planned to introduce targeted labour-support schemes, including investments in new technology and machinery with options for a degree of automation.
Thanks to the continuous growth of home purchase subsidies (CSOK) and wages, where real values have grown by 10 percent in the last half year alone, house and apartment construction orders are expected to grow further, he said. The ministry said in a statement on Tuesday that Hungarian construction figures were outstanding in relation to the other Visegrad Group countries. Further, pending the release of the relevant EU data, it is expected that Hungary will occupy first place in the European Union, too.
Analyst reaction
Financial analysts also forecast lasting expansion in the sector. András Horváth of Takarekbank said that the 36.8 percent expansion had exceeded expectations, with growth at an eight-year high. He forecast growth of up to 28 percent in 2017. Orsolya Nyeste of Erste Bank said that labour market strains could curb the expected expansion, although the August figures showed no sign of that. Nándor Mester of real estate site otthonterkep.hu, said that projects that were lagging behind due to labour constraints and a lack of materials could lead to liquidity problems for entrepreneurs in the next 6-8 months and a counterweight to the current upswing.
via ksh.hu and MTI