Construction sector output up 24.4% in August

Construction

The volume of construction output was 24.4% higher in August 2018 than a year earlier based on raw data. Output increased in both main groups of construction; in the construction of buildings by 10.1%, and in civil engineering works by 46.8%.

Based on seasonally and working day-adjusted indices, construction output increased by 1.9% in August compared to the previous month.

In August 2018, compared to August 2017, the increase in output in the construction of buildings was due to industrial, commercial and residential projects, while in civil engineering growth continued to be generated by road, railway and utility projects.

Of the divisions of construction, output increased by 19.6% in the construction of buildings, by 56.0% in civil engineering, and by 9.8% in specialized construction activities.

The volume of new contracts increased by 4.3% year-on-year, within which the volume of new contracts for the construction of buildings increased by 13.5%, while decreasing by 4.4% for civil engineering works.

The stock of contracts at the end of August at construction enterprises was 58.8% higher year-on-year. The stock of contracts was 1.7% higher for the construction of buildings, and 79.8% higher for civil engineering works than a year earlier.

In January-August 2018, compared to the first eight months of 2017, construction output rose by 22.6%.

In absolute terms, construction sector output stood at HUF 327.9 billion in August, and HUF 1,864.9 bln in January-August 2018.

Speaking to state news agency MTI, analyst András Horváth of TakarékBank said construction sector output growth could continue to accelerate in the coming 18 months, but home construction growth should then slow down significantly due to the phasing out of the preferential VAT rate on home construction at the end of 2019.

TakarékBankʼs analysts project more than 20% output growth in the sector in 2018, and around 15% in 2019.

Dávid Németh of K&H Bank said construction sector growth is driven by EU-funded infrastructural investments, home construction and commercial property developments, adding that the growth rate of the order stock has been declining since May in the building construction segment, and since December in civil engineering. He also noted that the base figures are already high.

Construction output data for September 2018 will be published on November 12.

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