Growth of construction industry has come to a halt and risks become more and more visible

The Hungarian construction industry has achieved a growth each month for more than one year but this June production has decreased, i.e. the sector came to a sudden standstill, partly due to uncertain circumstances. Nevertheless, it had a moderate, 1.2 per cent increment in late June.

According to KSH's latest figures, the volume of the Hungarian construction production decreased in June by 8.1 per cent in annual comparison. Of the main groups of buildings, the volume of construction of buildings has fallen by 4.8 per cent and the decrease of other structures was 11.7 per cent in June compared to the same period of the previous year.

"According to the latest figures, a halt can be observed in the sector. Taking the monthly results of the recent period into account, it turns out that the production measured in annual comparison was in the negative before issue of the current data in April 2021 for the last time. However, the sector is still in the positive range in the first half of this year: the volume of production exceeded the level noted in the first six months of 2021 by 7 per cent" - said Tamás Vida, CEO of KÉSZ Holding Zrt.

He added: The orders placed that essentially determine the sector's future performance was by 1.2 per cent higher in June, i.e. at the end of the half year, than one year ago. However, in the previous months of this year, this index was higher, i.e. a more moderate growth can be expected in this field, too.

The CEO also said that the stall can be explained by several factors. In addition to the higher prices of raw and basic materials and wage increase, the uncertain international economic situation and the negative effect of the war in the Ukraine also affect adversely the position of the construction industry. Besides, it is worth mentioning that, in addition to inflation, the increase in interests aimed at the suppression of inflation also raise the costs of financing and investment. KÉSZ Group is able to manage the effects arising from price increase and economic uncertainty, so construction projects progress according to the original schedule.

According to the CEO, it is of key importance from the point of view of the future of construction industry on longer run that the capacities established in recent years, so their role in economic growth remain. Similarly, the digitalization's greater role in construction industry in the course of operation of buildings is an important, moreover, more and more significant factor. Consequently, owing to this, buildings can be operated in a more sustainable and cost-efficient way in the future and, consequently, it will be a key factor due to the current energy crisis and, as a result, the increasing running expenses.