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Wednesday, June 18, 2008

Hungary Construction Output April 2008

Hungary's construction industry may be stabilising (ie it may not continue to contract) although the level of output is very low when comapered to the higher levels achieved before the start of the 2007 slump.

The volume of construction industry output rose 0.8% year-on-year in April (unadjusted figures), and declined by 1.6% when adjusted for the number of working days, according to data from the Central Statistics Office. In seasonally and workday-adjusted figures, construction industry output rose 2.9% compared with March. In the first four months of the year, total output was down by 13.5% over the first four months of 2007.

Orders continue to remain low. At the end of April, orders for construction companies stood 31.7% lower than a year earlier, with approximately the same rate for buildings and other structures. New contracts signed in the first four months of 2008 represent only a reduction of 3.1% on the orders placed in the corresponding months of 2007, however there is a big difference between the two major branches of the construction industry: new orders for building construction actually fell 28,7%, while contracts for other construction projects grew 41.2% - a number which is largely produced by a major highway construction contract signed in January.

Another important consideration is that last year's massive construction industry slump is almost certain to push each year-on-year growth figure in 2008 into the positive range (with the exception of May, when negative year-on-year growth is expected). This means that a small-scale improvement will translate into higher growth figures compared with last year - even if these higher “growth figures" actually represent a decrease in output. Despite this, the trend willobviously tend to nudge up GDP growth slightly.

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