International Property News

Building output growth slows down to 0.8% in March

13th May 2008

Czech building output grew by 0.8 percent year-on-year in March, while building output adjusted for the number of workdays rose by 3.8 percent, the Czech Statistical Office (CSU) said Tuesday.

Compared with 2007, March was two workdays shorter. Building output in March last year was 26.5 percent higher compared with March 2008.

The record growth in building output at the beginning of 2007 was due to warm weather, higher demand for the construction of new flats and investment in transport infrastructure, analysts said.

In March 2008, building output increased in new construction, reconstruction and modernisation, as well as repairs and maintenance, just like the previous month.

The growth was pulled above all by financially demanding construction of motorways, roads and railways, including their reconstruction and modernisation.

"Above all transport infrastructure construction has been expanding, slowly catching up with the deficit created in the past decades. Especially money for new roads and railways pulls the construction sector towards better results," said CSOB economist Petr Dufek.

The results are no surprise for building companies either.

"The trend has been the same for several months: the volume of shopping and industrial centres construction is falling and homes construction remains relatively stable, while the intensity of infrastructure construction is growing," said Ondrej Such, spokesman of building company Skanska CS.

Month-on-month, seasonally adjusted building output dropped by 1.1 percent in March.

Planning offices issued 9,833 building permits in March, an increase of 4.1 percent year-on-year. The approximate value of permitted projects decreased by 8.4 percent on the year to Kc33.2bn.

Contracted construction work carried out by building companies with 20 or more staff grew by 0.4 percent year-on-year. New construction, reconstruction and modernisation rose by 0.2 percent, of which building construction fell by 3 percent. In contrast, civil engineering projects added 8 percent.

Staff numbers at companies with 20 or more staff decreased by 0.1 percent on the year. But statisticians said the figure does not include employees hired by employment agencies.

The average nominal monthly wage grew by 13 percent to Kc26,020, while real wage added 5.5 percent. The average hourly wage increased by one-fifth to Kc181.

Labour productivity per employee rose by 0.5 percent and labour productivity per hour was 6.8 percent higher.

Planning offices permitted the construction of 2,825 flats in March, a drop of 784, or more than one-fifth, year-on-year. There were 2,337 new projects and 488 modifications. The approximate value of newly permitted homes was Kc6.3bn.

Analysts expect the construction sector will continue to grow also in the coming period.

"The construction segment is very likely to maintain a solid growth pace also in the months to come. The boom in homes construction as well as the efforts to develop faster neglected transport infrastructure will last," Dufek said.

The ability to obtain resources from the EU and sufficiency of companies' capacities to meet the growing demand for construction work remain the limiting factor, he added.

The EU's statistical office Eurostat said building output adjusted for the number of workdays in the EU grew by 5 percent year-on-year in February.

From EU countries whose data were available, the highest growths were recorded in Slovenia (41.6 percent), Poland (18.6 percent), Slovakia (12 percent) and Germany (11.3 percent). The only decrease of 5.6 percent was registered in Spain.

Source: Prague Monitor