The number of permits for construction of new residential buildings increased by 2.7% y/y to 3,822 in June after jumping by 17.1% y/y a month before, according to data released by the state institute of statistics. Even if significantly milder, the increase of the indicator is a good sign for the construction sector, which remains hit by the state’s public investments slash. In fact, the number of requested permits for new residential buildings constructions has been mostly sustained by the private investments in the past years. The boost reported in May was most likely fuelled by some new projects start, but the June performance was rather weak and the indicator dropped on monthly basis, proving that there are no major plans for this summer in the field.
Meanwhile, the number of permits for administrative buildings construction decreased strongly again. The dynamics of permits for new administrative buildings has been generally moving sideways, as it heavily relies on public spending. Hence, the repeated double-digit fall of the permits for new administrative buildings stands as another proof that the public authorities have weak intentions to invest in the field in the following periods. At the same time, the number of permits for other buildings increased by 6.8% y/y in June, for the second consecutive month on the rise, but the improvement might also be occasional, in our view. That segment includes hotels, retail buildings, buildings for transport and telecommunications, industrial and agricultural buildings, schools, healthcare and cultural buildings. Thus, a consolidated recovery in this segment is also heavily dependent on state investments.
Broadly, the number of permits has been generally fluctuating, the occasional growths being generated by the projects financed with private investments. More investors became interested in developing new residential projects after the real-estate strong growth reported last year. However, the indicator’s dynamics remains hampered by the lack of interest from the public sector, which keeps cutting investments for affording the growing expenses of the government’s expansionary policies.