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Monday, May 19, 2008

Hungary Construction Output March 2008

Output in Hungary's construction industry decreased by 13.5% year on year in March, according to unadjusted data issued by the Central Statistics Office (KSH) this morning. Adjusted for working days the year on year drop was 12.6%. There had been a 19.2% year on year decline in February and a 3.4% drop in March 2007.

The KSH also reported a 2.5% month on month rise in construction industry output from February, according to seasonally and working day adjusted data. This compares with a 4.4% month on month increase in February and a 5.6% fall in March 2007.

In the first quarter, construction output was down by 19.2%, even more drastically than in the whole of 2007 (-14.1%) and also by more than in the first two months (-13.3%). There are basically two ways of looking this. The first of these is that the Hungarian construction industry is still declining at a serious rate, and the second is to emphasise that output has now been rising (on a seasonally adjusted basis) since January (see index chart below) and hence you might say that while the situation continues to be bad, and shows no sign of impending recovery, we may well have touched a local bottom in January, so the situation may well not deteriorate further, and may well now improve slightly. Certainly output in March was the highest since August 2007. Everything now depends, I think, on the evolution of other factors in the Hungarian economy and on how these are influenced by economic events outside Hungary's borders, ie by the external environment.

As reported by KSH:

The volume of building of complete constructions was down by 16.7% year on year in March, compared with a 20.2% fall in February and a 1.0% fall in Mar 2007. In Q1 there was a decrease of 21.6% in this sub-branch.

In building installations the statistics office reported a 10.4% year on year decline in March compared with a 27.4% fall in the previous month and a 10% drop in March 2007. In the January-March period the KSH reported a 16.7% year on year decrease.

The decrease in the volume at building completion remained largely stationary at 9.3% year on year compared with -10% in February. In this sub-branch there was a 5.2% year on year decline in March last year. The Q1 drop came to 20.9% year on year.

The stock of orders at the end of March (HUF 717.3 bn at current prices) was down by 23.6% from a year earlier. The stock of orders for buildings totalled HUF 371.8 bn in March, down 7.1% year on year, which compares with a rise of 8.4% in February and and a fall of -0.4% in March 2007.

In the civil engineering sector the stock of orders was down by 34.7% year on year (to HUF 345.4 bn), as gainst a drop of 35.0% a month earlier and a 47.7% decline in March 2007.

In terms of new orders, however, the picture has not really improved. Following a promising growth of 52% in January, new orders in the construction industry decreased by 14.8% year on yearr in February and 11.2% in March, totalling HUF 109.9 bn in the third month of the year. In March 2007, new orders were down 44.3% year on year.

New orders concluded in March in the buildings category were down 23% year on year at HUF 66.3 bn at current prices, which compares with a drop of 9.4% in the previous month and an 28.8% fall in March 2007.

For civil engineering, new orders grew by 15.7% year on year in March totalling HUF 43.6 bn in the third month, which compares with a decline of 22.6% in February and a plunge of 62.8% yr/yr in March 2007.

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