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Over 300 construction firms fold in March


Construction firms folded in March

The output of construction firms in Hungary dropped 3.4% year-on-year (yr/yr) in February, the decline falling narrowly from a 4.4% yr/yr lapse in January, the latest sector figures from the Central Statistical Office (KSH) show. KSH noted that the first two months of the year traditionally generate output that is around 60% of the averages registered in the ensuing months due to seasonal factors.

The figures mark the continuation of a trend that started in 2006. Ever since, the output of the sector has fallen each year, with an annual dip of 10.1% recorded for 2010. Still, the rate of the decline is showing improvement considering that December, 2010 saw a yr/yr dip of 12.3%.

However, the association of construction companies ÉVOSz has grim expectations for the rest of the year, now projecting an industry-wide contraction of 6-10%. The group based its forecast on the trend that despite the slowing rate of negative output, the stock of new orders was halved from the same month a year earlier. KSH figures show that the aggregate stock of orders at the end of February was down 28.8% yr/yr, after a yr/yr slump of 21.7% yr/yr in January and a smaller, 13.3% yr/yr dip at the end of December.

The latest assessment also means that the outlook has deteriorated significantly over the course of two months, as ÉVOSz predicted a construction total of 2-3% at the start of the year.

The pressure is naturally causing a growing number of construction companies to fold. According to corporate information provider Opten, creditors and suppliers motioned liquidation against 334 builders in March a month-on-month increase of 11.3%. Nonetheless it marks a yr/yr drop of 7%. Last month, 569 construction companies were founded, a leap of 20% from February and up 10.3% from one year earlier, Opten said.


This article appeared in the BBJ's Office Market special report on April 22, 2011.