Hungary construction industry runs out of steam in November
The 4.5% month-on-month decrease should not be assigned too much significance as the KSH reported growth of more than 8% combined in the preceding two months, which means the zigzagging monthly performance typical of smaller industries becomes a smooth growing trend in the longer term.
That said, the decreasing momentum of the second half of 2019 is a better indicator for construction industry outlook than the rocket rid of the first half, as orders indicate that the industry may be over the peak. However, we are not facing a crash like the one seen in 2016 when EU funding dried up temporarily, as the volume of new contracts in November was still 24.7% higher than a year earlier: new contracts for the construction of buildings were 9% higher, while the volume of contracts for civil engineering works rose 36.5% year on year as high-value contracts for road constructions and railway renovations have been concluded in November.
However, the total stock of contracts decrease due to the large number of completed projects, foreshadowing slowing growth. The volume of the November month-end stock of contracts at construction businesses was 8.3% lower compared to the November 2018 data, continuing the downward trend of recent months.
The stock of contracts increased by 46.4% for the construction of buildings and decreased by 20.1% for the construction of civil engineering works in November. This indicates that even as private projects keep pace with economic growth, government orders are running out of steam as EU funding is running out.
Cover photo: Getty Images
