Romania’s construction sector under-performs as government cuts public projects

Romania’s construction sector under-performs as government cuts public projects
By Iulian Ernst in Bucharest January 16, 2017

Romania’s construction works index contracted for the fifth consecutive month in November, when it plunged by 13.3% y/y marking the worst performance in more than two years, the statistics office INS reported.

Civil engineering works, mainly public infrastructure projects, collapsed by 37.4% y/y. The subdued activity in the civil engineering segment is largely to blame for the overall decline in the construction market last year and particularly in the second half of 2016.

Furthermore, the performance of the index was revised downward in October, from minus 0.1% y/y to minus 2.5% y/y.

The seasonally-adjusted index edged down by 2.2% m/m in October and by 4.1% m/m in November. It has decreased on a monthly basis in nine of the past twelve months.

Thus, the construction works index in this segment declined by 5.8% y/y in Q3, to further lose momentum at minus 11.0% y/y in October and minus 37.4% y/y in November. The seasonally-adjusted construction index for civil engineering works hit the weakest level in the past decade in November.

In contrast, the residential buildings segment performed well in Q3 and marked outstanding growth rates in the first two months of Q4. Thus, the construction works index expanded by 78.2% y/y in November after the 34.1% y/y expansion in October. For two consecutive months, the seasonally-adjusted index for the segment marked outstanding levels that were exceeded only in two other months in more than seven years. Though the residential segment has performed constantly well in the past two and a half years, it is still some 16% below pre-crisis peak level.


Construction Works Index, y/y 2013 2014 2015 Q1 16 Q2 16 Q3 16 Oct-16 Nov-16
Total -0.6% -6.8% 10.5% -0.2% 7.7% -2.5% -2.5% -13.3%
Residential bldgs. 5.4% 32.6% -5.8% 8.8% -0.3% 1.5% 34.1% 78.2%
Non-residential bldgs. -7.5% 16.6% 1.1% -3.4% 0.9% 2.6% -0.7% 17.9%
Civil engineering 1.4% -21.8% 20.0% -0.8% 13.4% -5.8% -11.0% -37.4%
Source: INS