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KSH: Construction sector output growth slows to 0.2% in July

Output of the Hungarian construction sector saw a year-on-year rise of 0.2% in July, decelerating from a year-on-year growth of 10.2% in the preceding month, Hungary’s Central Statistical Office said today.

KSH data suggest that the production of both main groups of construction changed only slightly; the construction of buildings decreased by 0.5% and that of civil engineering works rose by 0.9%.

Of the divisions of construction, output decreased by 11.1% in the construction of buildings and by 5.9% in the construction of civil engineering works, KSH said, adding that output was up 15.1% in the division of specialized construction works, accounting for more than 40% of construction output.

The volume of new contracts was 4.2% lower, while the volume of new contracts decreased by 12.4% in the construction of buildings and by 0.2% in the construction of civil engineering works, KSH said. At the end of July 2015, due to a fall in new contracts in the past months, the volume of the stock of contracts was 46.9% lower than a year earlier. Within this, the volume of the stock of contracts decreased by 11.6% for the construction of buildings and fell by 54.2% for the construction of civil engineering works.

László Koji, who heads construction business association EVOSZ, said the data confirm expectations that output will fall during the rest of the year, Hungarian news agency MTI reported. In absolute terms, output should reach HUF 2.100 trillion for the year, he added, according to MTI.

Erste analyst Gergely Ürmössy told the news agency that the July stagnation in the sector was disappointing. Less new orders in previous months were warning signs, but he expected at least single-digit growth until December.

K&H Bank chief analyst Dávid Németh also sees weakness in the sector, MTI reported, adding that there is some growth from state investments but there are no signs that the real estate market is strengthening, he added.