Hungary’s construction sector output growth jumps

Output of Hungary’s construction sector rose by an annual 15.1 percent in May, the Central Statistical Office (KSH) said on Monday.

Output of the building segment rose by 8.8 percent during the period. Output of the civil engineering segment was up 23.7 percent.

KSH said output of the building segment was lifted by the construction of industrial facilities. In the civil engineering segment, construction of highways, railways and utilities infrastructure supported the increase.

In a month-on-month comparison, output was up 6.1 percent, adjusted for seasonal effects and the number of workdays.

Output at current prices rose to 259.5 billion forints (EUR 805.7m) from 206.4 billion in May 2017.

Order stock was up 67.4 percent at the end of May from twelve months earlier. Orders in the building segment were up 9.3 percent and orders in the civil engineering segment increased by 91.1 percent.

New orders were down 10.7 percent annually, falling by 33 percent in the building segment and by 24.4 percent in the civil engineering segment.

In the first five months of 2018, construction sector output climbed by 16.9 percent from a year earlier to a total output of 940.3 billion forints at current prices.

Commenting on the data, the information and technology ministry’s deputy state secretary said that clients’ trust puts the sector in a good position.

3,400 new flats were completed in the first quarter of 2018, Gyula Pomázi noted. Further, 72,000 families have applied for government-funded family home subsidies (CSOK) worth about 205 billion forints in total, which forecasts further growth, he said. Construction companies have also launched equipment developments, which also points to expansion, Pomázi said.

Takarékbank analyst Gergely Suppán said that next to the boom in housing, office space and commercial real estate, government investments also drive the sector’s growth. Forecasts are good, he said, although lack of capacity on the contractor side hinders completion of orders.

K+H Bank analyst Dávid Németh warned that lack of capacity and work force risk that prices in the sector rise.

With the interests on loans growing, this could make selling houses difficult, he said. The sudden jump in stock orders may prompt companies to expand capacity, which may end up unused once the present wave of developments end, he said.

Featured image: MTI

Source: MTI