Romania’s construction works volume index surged by 41% y/y in July, with the capital repairs segment soaring by 67% y/y and the other segments rising by 30%-40% y/y, according to data published by the statistics office INS. The seasonally and workday adjusted index rose by 20% m/m.
In H1, the construction works index rose by 6.1% y/y, reversing the slowdown seen in 2024 (-2.8% y/y in H1 2024).
The nature of the July peak (visible in the m/m advance of the seasonally adjusted index), of a size seen typically in the last months of the year when the projects are commissioned, remains unclear.
Speeding up the registration of some of the contracts (where possible) before the VAT rate hike of August 1, particularly relevant for the residential units, where the VAT rate rise was more relevant, is a possible cause. It remains to be confirmed once the August readings are published. Organic expansion of the activity in the entire construction sector is a less plausible scenario.
Notably, the capital repair segment (thinner than 10% of the total volume of works) has boasted high activity rates throughout the entire year (+51.5% y/y in H1 2025) before the July peak (+67.4% y/y).
By the type of construction objects, the rise in July was more evenly distributed. The volume of residential buildings rose by nearly 40% y/y (supporting the speeding up of contracting before the VAT rate hike as a cause), while the segments of non-residential buildings and civil engineering works advanced by nearly 40% y/y each.
In H1, the civil engineering works (just over a fifth of total construction works) boasted the highest growth rate (+11.0% y/y) while the residential segment posted a moderate 2.7% y/y advance and the non-residential segment contracted by 0.3% y/y.
iulian@romania-insider.com
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