In a month-on-month comparison, output rose a seasonally and workday-adjusted 1.1 percent. In January-June, output was up an annual 27.0 percent. In absolute terms, construction sector output came to 227.6 billion forints in June, at current prices. Order stock was up 94.5 percent at the end of June from twelve months earlier.

Orders rose by 41.0 percent in the building segment and 126.8 percent in the civil engineering segment. New order volume rose by 39.6 percent, up 26.8 percent in the building segment and rising 47.9 percent in the civil engineering segment. In the civil engineering segment, the increase is due to contracts for road and railway developments, KSH noted.

Commenting on the data, economy ministry deputy state secretary Zoltán Marczinkó told public news channel M1 that the ministry expects the construction sector to add 0.5 percentage points to GDP growth this year.

The volume of investments in Q1 this year totalled more than 1,000 billion forints, a 34 percent increase over the same period last year, Marczinko said. He said the number of home building permits issued had also increased significantly, which he attributed to the reduced VAT rate on home construction and the CSOK housing subsidy programme.

Analyst Gergely Urmossy of Erste Bank said the dynamic growth in the number of new contracts shows that demand will remain substantial the coming months, which should continue to drive output growth in the sector.

However, contractors are facing an increasing labour shortage, which already limits growth potential in the industry, he noted. He said construction sector output could grow by up to 20 percent this year. András Horváth of Takarékbank forecast output growth exceeding 25 percent in 2017.

Republished with permission of Hungary Matters, MTI’s daily newsletter.