Romania’s construction works volume index contracted by 16.8% y/y in May after the 19.3% y/y decline in April, the statistics office (INS) reported on July 13. 

Subdued investment into public infrastructure projects dragged the construction market down.

The disappointing performance in April-May came after the modest 1.0% y/y advance of the construction volume index in Q1. This quarter’s performance is set to return to negative territory, in line with the 15.9% y/y plunge in Q4 last year.

The main driver for the market’s contraction in April-May is the same as it was in Q1 and Q4 last year: civil engineering works, more specifically roads, bridges and other non-building constructions. In May, the volume of such works contracted by 32% y/y after the 41% y/y decline in April, 21% y/y in Q1 and 31% y/y in Q4.

In contrast, the residential segment of the construction market has been growing at high rates since last October. In April-May, the volume of works on residential buildings projects increased by 57% and 48% respectively. In Q1, the annual growth was 80%, but the activity on the construction market is seasonally subdued in the first months of the year.

Notably, the overall dynamics of the non-residential buildings’ segment does not reflect the rising demand of office space. Work in this segment contracted by 14% y/y in April and 21% y/y in May. The segment expanded by 1.1% in each of the past two years after the 16.6% y/y surge in 2014.

Construction Works y/y	2013	2014	2015	2016	Q4 16	Q1 17	Apr-17	May-17
Total	-0.6%	-6.8%	10.5%	-4.8%	-15.9%	1.0%	-19.3%	-16.8%
Residential bldgs.	5.4%	32.6%	-5.8%	12.1%	-16.1%	80.1%	56.6%	48.3%
Non-residential bldgs.	-7.5%	16.6%	1.1%	1.1%	-35.4%	-7.3%	-14.1%	-20.5%
Civil engineering	1.4%	-21.8%	20.0%	-11.2%	-1.2%	-20.7%	-40.6%	-31.5%
Source: INS