Hungary’s construction output trimmed its fall to 9% y/y in August, statistics office KSH reported on October 17. The result marked the eighth month of decrease in a row, in a trend provoked by a sharp decline in projects driven by EU funds this year, but also added to signs that the free fall is set to slow.
Despite the ongoing decline in annual terms, output grew 4.6% on a monthly basis, based on seasonally and working day-adjusted indices. That, together with a significant increase of confidence in September, built on hopes of that the depressed sector should finally halt the slide in the coming months.
The construction of buildings increased 7% y/y in August. According to KSH, the growth "continues to be largely the result of the construction of industrial and, to a lesser extent, educational buildings and sports facilities”.
At the same time, output in civil engineering - by far the largest segment - continued to shrink rapidly, falling 23.9%. That illustrates that recovery of the construction sector remains unlikely until the pipeline of EU-funded projects starts flowing once more. Similarly to recent months, “the largest decrease was recorded in the output of road and railway as well as public utility construction enterprises,” KSH writes.
A 13.3% y/y drop in August in the overall volume of new contracts raises some concerns over the recovery of the sector. Fresh building construction agreements decreased 20.6%, while civil engineering deals dropped 8.2% y/y.
Across the first eight months of the year, construction output was 22% lower than a year earlier. The weakness did not help Hungary's wider economic performance in the second quarter, as the lull in construction - alongside drooping industrial production - has dented overall GDP growth.