Construction output volume up 38% y-o-y in July

Construction

The volume of construction output was 38.0% higher in July 2018 than a year earlier based on raw data, rising at the fastest rate since January. Output increased in both main groups of construction: in the construction of buildings by 28.5%, and in civil engineering by 48.3%, show monthly data from the Central Statistical Office (KSH).

Based on seasonally and working day-adjusted indices, construction output increased by 4.5% in July compared to the previous month.

Output in the buildings segment was lifted by construction of schools, factories, stores and homes, the KSH said. Civil engineering output was supported by road, railway and utilities projects, it added.

Of the divisions of construction, output increased by 60.0% in the construction of buildings, by 43.7% in civil engineering, and by 20.2% in specialized construction activities.

The volume of new contracts increased by 70.3%, within which new contracts concluded in the construction of buildings fell by 1.8%, while new contracts rose by a striking 134.4% in civil engineering. In July, high-value new contracts were concluded for developments in traffic infrastructure and telecomunications networks.

The volume of contracts at the end of July at construction enterprises was 61.6% higher year-on-year. The volume of contracts was 4.9% higher for the construction of buildings, and 82.4% higher for civil engineering works than a year earlier.

In January-July 2018, compared to the first seven months of 2017, construction output rose overall by 22.2%. In absolute terms, output stood at HUF 1.537 trillion in January-July. In July alone, output totaled HUF 284.6 bln.

Analysts interviewed by state news agency MTI said they were surprised by the pace of the July increase in construction sector output. Péter Virovácz of ING Bank said both main segments of the sector showed strong performance, while noting that the order stock already reflects the impact of the phasing out of preferential VAT on home construction, due at the end of 2019.

Gergely Suppan of TakarékBank predicted annual construction output growth of more than 20% this year and around 15% in 2019.

Dávid Németh of K&H Bank likewise forecast 20% annual output growth in the sector this year.

Construction data for August 2018 will be published on October 15.

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