According to the figures released by the National Institute of Statistics (NIS) today the volume of the activity in constructions rose for the second month in a row in Dec, by 3.3% M/M, an evolution determined by the rebound of the capital repairs (up by 12.2% M/M).
The current repairs and the new constructions increased by M/M paces of 5.3%, and 5.4%, respectively. From the supply-side perspective, there can be noticed the rebound of the residential constructions (up by 25.6% M/M) and the increase of the non-residential constructions by 12.5% M/M in Dec. On the other hand, the engineering constructions contracted by 1.4% M/M in Dec. In Y/Y terms this capital- and labour-intensive sector declined for the third month in a row in Dec, by an intensifying pace to 11.6%, as all main components contracted:
the new constructions (by 11.2%), the capital repairs (by 7.9%) and the current repairs (by 14.7%). From the supply-side perspective, the residential constructions, the non-residential constructions, and the engineering constructions diminished by Y/Y paces of 10.0%, 13.5%, and 11.1% in Dec. Therefore, in 2024 the volume of activity in constructions decreased by 5.9% Y/Y, after the increase by 16.1% Y/Y in 2023, due to the decline of the new constructions (by 5.3% Y/Y), and of the current repairs (by 11.2% Y/Y), partially counterbalanced by the increase of the capital repairs (by 1.8% Y/Y). In the alternative approach, the residential constructions declined by 22.1% Y/Y in 2024, due to the high level of the financing costs, and the persistence of the uncertainties. The non-residential constructions contracted by 8.0% Y/Y. On the other hand, the civil engineering constructions rose by 2.0% Y/Y in 2024, due to the implementation of the public infrastructure programmes.
Our view: The increase of the volume of activity for the second month in a row in Dec expresses stabilisation prospects for the construction sector. According to our forecasts (updated by incorporating the data released today by NIS) the volume of the activity in constructions would increase by average annual paces of 6.5% in 2025, 3.4% in 2026, and 4.1% in 2027. In other words, we forecast a rebound of the activity in constructions in the short-run, an evolution supported by the continuity of the investment cycle and the acceleration of the programs to develop the infrastructure | NEUTRAL
