Growth in construction continued in early 2016

Despite the fear of some analysts that the construction output may drop after Slovakia stopped drawing the money from EU funds, yet it continued to rise also in January 2016.

Illustrative stock photoIllustrative stock photo (Source: SME)

THE TOTAL construction output increased by 16.4 percent year-on-year to €260.3 million. After seasonal adjustment, it declined by 6.2 percent compared with December 2015, according to the data presented by the Statistics Office (ŠÚ).

Though part of the sector focusing on construction of infrastructure was impacted by the end of the 2007-2013 programming period, from which Slovakia could draw money by the end of 2015, and dropped by 13.1 percent y/y, the sector as a whole maintained a relatively dynamic annual increase.

“A lifebelt to constructors has been thrown by a reviving economy which kicked off the real estate market and private investments,” Ľubomír Koršňák, analyst with UniCredit Bank Czech Republic and Slovakia, wrote in a memo.

While civil engineering projects declined by 13.1 percent y/y, the construction of buildings segment continued growing, resulting in an increase of its annual growth from 20.4 percent to 25.3 percent. Such strong annual growth was reported for the last time in June 2006, Koršňák said.

Compared with January 2015, the output of domestic construction companies grew in January 2016 by 15.8 percent to €246.9 million. Its share on the total construction output dropped by 0.5 percentage points y/y to 94.9 percent. The domestic output was affected by the growth of works in new construction, renewals and enhancements by 19.1 percent and in repairs and maintenance works by 9 percent.

Regarding the structure of the domestic output, new construction, renewals and enhancements constituted 72.6 percent, up by 2.1 percentage points y/y. The share of repairs and maintenance works was cut by 1.8 percentage points to 26.5 percent.

Non-domestic construction output carried out by construction companies grew by 28.1 percent y/y. Its share constituted 5.1 percent out of the total output, according to ŠÚ.

Koršňák predicts that the restoration of the real estate market will continue impacting the construction output growth also in the coming months. He, however, expects that its tempo will slightly decelerate.

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