Construction output jumps 26 per cent in February
The output of Hungary’s construction sector rose by 26 percent year-on-year in February, the Central Statistical Office (KSH) said on Friday.
Output of the building segment rose by 19.8 percent during the period. Output of the civil engineering segment climbed by 40.1 percent.
KSH said output of the building segment was lifted by home, school and factory constructions. In the civil engineering segment, construction of highways, railways and utilities infrastructure drove the increase.
In a month-on-month comparison, output was down by 5 percent, adjusted for seasonal effects and the number of workdays.
Output at current prices rose to 153.9 billion forints (EUR 494.6m) from 112.3 billion in February 2017.
Order stock was up by 92.4 percent at the end of February from twelve months earlier. Orders in the building segment were up 4.3 percent and orders in the civil engineering segment increased by 145.4 percent.
New orders were up by 0.7 percent annually, falling by 45.9 percent in the building segment but rising by 51.4 percent in the civil engineering segment.
In the first two months of 2018, construction sector output climbed by 33.5 percent from a year earlier.
Analysts expect the dynamic growth to continue throughout the year.
András Horváth of Takarékbank predicted 25 percent output growth in 2018 from the strong, 29.6 percent base of 2017. He noted the substantial increase in the sector’s order stock, adding that this can be expected to grow further as there is strong demand for both residential properties and office developments. Horváth added that in order to maintain the momentum in the construction sector it would be useful to extend the preferential VAT rate on home construction, due to expire at the end of 2019, since additional budget revenues exceed the amount of the VAT lost already in the short term.
Dávid Németh of K+H Bank said construction sector output could continue expanding in the coming months, albeit at a decelerating pace due to the high base figures. He forecast 10 to 20 percent growth in the sector in 2018, driven by the family policy the government is likely to pursue after the April 8 election.
Commenting on the data, Gyula Pomázi, deputy state secretary of the economy ministry, said that such growth from the strong January base was “promising” for the sector’s year ahead. The government intends to boost demand for construction with its home purchase subsidy scheme CSOK, VAT cuts and soft loans. The government also provides grants for technological development in the sector, Pomázi said.