KSH: Hungary’s construction output down 7.8% in October

Construction

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The volume of construction in Hungary was down by a year-on-year 7.8% in October, with the construction of buildings growing by 18.4% and that of civil engineering works falling by 23.5%, Hungary’s Central Statistical Office (KSH) said today.

In a year-on-year comparison, KSH noted that the output of the two main groups of construction both reversed directions, the growth in the construction of buildings being chiefly due to the construction of industrial buildings.

With regards to the divisions of construction, output grew by 18.8% in the construction of buildings and was down by 32.8% in the construction of civil engineering works compared to the high base a year earlier, KSH reported, adding that output rose by 6.2% in the division of specialized construction works, accounting for more than 40% of construction output.

The volume of new contracts saw a y.o.y. rise of 4.1%, with contracts for the construction of buildings being up by 83.4% but the number of contracts on the construction of civil engineering works down by 37.1%.

According to KSH, the increase in new contracts in the last two months could not compensate for the earlier, more than year-long recession, so the month-end volume of the contract portfolio of construction companies continued to be lower than a year earlier, by 47.5% at the end of October.

Taking into account the first ten months of the year, construction output expanded by 3.1% as compared to the same period of the previous year, KSH reported, while in a month-on-month comparison, based on seasonally and working day adjusted indices, construction output was down by 7.6% in October.

Commenting on the figures, László Koji, head of industry association EVOSZ, told Hungarian news agency MTI that the drastic fall in order stock has foreshadowed the drop in construction sector output. The professional said they would be happy if sectoral output in 2015 could stay on the same level as last year. 

ING analyst András Balatoni told the news agency that sectoral output could significantly fall in the next three quarters because of lower output in the civil engineering segment. He added that this can be attributed to fewer big infrastructural projects completed with funding from the European Union. Balatoni said the first effects of lower VAT rates for home constructions are expected to start showing in the second half of 2016 at the earliest. 

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