Construction works volume in Romania up 0.8% y/y in April-May

The construction works volume in April-May increased by 0.8% y/y, according to data published by the statistics office INS. 

The sector’s modest performance comes after the 10.6% y/y surge in Q1 that was, however, driven by low base effects, therefore not entirely relevant. In fact, the average seasonally and workday adjusted construction works index in April-May increased by 0.5% compared to the average in the first three months of the year. 

The combined growth rate in the first two months of the second quarter (a modest 0.8% y/y) better reflects the medium-term dynamics of the sector, which has virtually stagnated for more than two years already. Future developments are uncertain as the government is reconsidering the budgets for public works, and the households’ interest in residential properties is also impacted by their uncertain incomes. 

The 5.9% y/y decline in 2024 may loom promising but it reflects an irregularity seen at the end of 2023 (when the market posted robust 16% y/y growth) and the beginning of 2024: an outstanding volume of works in civil engineering and residential segments was registered in November-December 2023, followed by subdued reported activity in Jan-Feb 2024 for precisely the same segments. Except for this irregularity, which may be the result of accounting, however, the seasonally adjusted construction works index has moved within a narrow, steady band during 2023-2024.

The quasi-stagnation seen in the construction activity over the past couple of years has been the result of declining dynamics in the residential segment that plunged at the end of last year to 80% of the average 2021 level, offset by increasing activity in the civil engineering (public works) segment that reached 160% of the average 2021 level. The complex segment of non-residential buildings (logistics, industrial, office, retail) has stagnated for more than three years, 20% above the average level in 2021.

The past years’ trend was confirmed by the figures for April-May. The volume of residential works (with a 27% weight) contracted by 4.9% y/y while the volume of engineering works (45^ weight) rose by 4.8% y/y. The non-residential construction works’ volume (28% weight) contracted by 2.4% y/y. 

iulian@romania-insider.com

(Photo source: Yury Sevryuk/Dreamstime.com)