Romania’s construction activity index contracted by 3.5% MoM (seasonally adjusted terms) and by 2.4% YoY (gross terms) in July, resulting in a less buoyant bigger picture than half a year ago.

In June, the seasonally adjusted index edged up marginally, and in May, it marked another significant (-7.2% mom) decline.

While the residential market segment maintains a robust growth trend (+32% YoY) despite high volatility, the non-residential segment (-18.8% YoY) has at best stagnated over the past year, and the civil engineering segment (public infrastructure projects, -6.7% YoY) has lost ground over the past several months after starting the year at a high level.

Such developments are not exactly unexpected: the non-residential market is formed by sub-segment moving opposite directions (logistics up, commercial, and office down), and the resulting trend is not necessarily relevant while more detailed data are needed.

The Government seems to have lost stem, at least in terms of civil engineering works, although it reports record investments.

Finally, the most delicate segment is the residential segment: rising sharply but potentially accumulating the toughest tensions (non-performing loans) as irrational decisions may be taken under the pressures of “imminent price hikes” narrative circulated on the sell-side (and partly true). 

andrei@romania-insider.com

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