Construction output growth decelerated to 7.9% y/y in July compared to the 8.1% y/y growth registered in June, the stat office (NSI) reported. Output also rose by 0.6% m/m in seasonally- and calendar-adjusted terms, thus confirming the construction sector recovery, in our view. The y/y growth was driven by accelerating buildings construction output, while the civil engineering segment contributed negatively. Building construction growth was up by 15.9% y/y, supported by the considerable growth of issued buildings permits in H1, as well as by rising housing demand, in our view. The mortgage lending continues to increase, which we think should mean that the buildings construction output growth is likely to remain solid in the next months.
Civil engineering declined by 0.9% y/y after two months of y/y growth, which can be explained by the still sluggish resumption of EU funds absorption. Still, we expect it to move back in the positive territory in the next months on account of the expected start of already delayed projects to be funded by the EU.