International Property News

Czech building output grows 0.6% last year

16th February 2009

Czech building output increased by 0.6 percent in 2008, the Czech Statistical Office (CSU) said Monday.

Seasonally-adjusted building output decreased by 0.5 percent in December month-on-month and shed by 2.6 percent in real terms year-on-year.

It is the worst result since the last recession which hit the sector in the late 1990s, said CSOB analyst Petr Dufek. At that time building output registered a slump by up to 7 percent.

"The reality is slightly worse than we had expected," said Vaclav Matyas, president of the Association of Building Entrepreneurs (SPS). SPS has foreseen a growth of around 1 percent.

The approximate value of permitted constructions increased by 9.3 percent last year. Employment in enterprises with 20+ employees dropped by 0.5 percent, the average wage rose by 11.6 percent and labour productivity grew by 0.6 percent.

Working days adjusted (WDA) construction output decreased by 5.9 percent in December 2008 on the year. December 2008 had two working days more than December 2007. Like in the previous months, output continued falling in building construction and went further up in civil engineering.

The planning and building control authorities granted 9,104 building permits in December (+2.8 pct yr/yr). Approximate value of constructions permitted in December 2008 decreased by 28.6 percent on the year to Kc26bn.

When looking at the data on the building permits in December, Komercni banka analyst Kamila Fialova said there are no reasons for optimism, also for the future.

"The amount of public money targeting the infrastructure and as always, the Czech Republic's ability to draw EU money will be decisive for construction this year and its staying in the black," said Dufek.

Transport structures will be the driving force in construction this year, said Fialova. She, however, expects a decrease of 1-to-2 percent this year.

Compared to December 2007, new construction increases were recorded in building permits for residential buildings (+22.4 pct) and non-residential buildings (+19.6 pct). Decreases occurred in environmental constructions (-3.4 pct). New constructions are valued at Kc18.2bn, a yr/yr fall of 10.6 percent.

The planning and building control authorities permitted the construction of 2,784 homes in December, down by 30.3 percent in comparison to December 2007. As many as 2,316 homes will be obtained by new construction, 1,149 fewer yr/yr, and 468 homes, a decrease of 61 homes on the year, will be obtained by renewals and enhancements. The approximate value of newly permitted flats in tenement houses was Kc6.8bn, the CSU said.

The number of employees in construction enterprises with 20+ employees fell by 0.7 percent in December against the same period in 2007. The average monthly nominal wage of employees increased by 17.5 percent year-on-year to Kc27,665 (real wage grew by 13.4 pct). The average hourly wage increased by 9.4 percent year-on-year to Kc232. Labour productivity per employee decreased by 1.5 percent and labour productivity per hour worked fell by 8.3 percent.

The real wage growth higher than productivity growth can be a problem for builders in the future and press for furthers cuts in workforce, said Fialova.

Contracted construction work carried out by construction enterprises with 20+ employees decreased by 2.2 percent year-on-year at constant prices in December. New construction, reconstruction and modernisation dropped by 0.7 percent, with building construction down by 10.7 percent and civil engineering up by 17.8 percent. Repair and maintenance increased by 9.5 percent. Construction work abroad decreased by 33.4 percent on the year.

Eurostat data show that WDA construction output in the entire EU dropped by 4.2 percent in Nov 2008 on the year, with Slovakia reporting the highest growth of 16.5 percent and Spain showing the biggest fall of 9.7 percent year-on-year.

Source: Prague Monitor