Construction production in August increased by 3.3 percent

Prague - Construction production in August increased again after a two-month decline, year-on-year by 3.3 percent. This was announced today by the Czech Statistical Office. Compared to the previous month, the construction output adjusted for seasonal influences rose by 1.4 percent. The indicative value of permitted construction decreased year-on-year by 3.3 percent to 35.2 billion CZK.
The increase in construction output in August was primarily due to the growth in ground construction for new buildings, renovations, and modernizations. On the other hand, the decline in production in engineering construction continued; however, it was no longer as pronounced compared to the previous three months.
František Polák from Metrostav expects further moderate growth in construction production. "It seems that the government wants to invest in transport infrastructure, and interest in apartments continues. I believe that the anticipated increase in VAT will not affect growth," he said.
According to CSOB analyst Petr Dufek, the rise in construction should continue. "But weather fluctuations will speak more in the results because last winter was extremely favorable for builders and created very strong comparative bases," Dufek stated. For the whole of this year, he believes that construction could achieve a real increase of 6.5 percent. According to Komerční banka analyst Eva Zamrazilová, it could be as high as nine percent.
The number of employees in construction companies with 20 or more people decreased by two percent compared to last August. According to Zamrazilová, this is because builders are increasingly employed through employment agencies, which classifies them into the service sector. There is also a shortage of labor. "Last but not least, in construction, compared to other sectors, illegal work is above average," added Zamrazilová.
The average nominal monthly salary increased by 7.5 percent to 22,113 CZK. The average hourly wage rose by 9.4 percent to 143 CZK.
Construction offices issued 11,285 building permits in August, including 6,461 for new buildings and 4,284 for changes to completed structures. The number of building permits decreased by 17 percent year-on-year.
New construction should result in buildings worth 20.6 billion crowns, representing a decline of 12.4 percent. Changes to completed buildings are expected to create constructions worth 14.6 billion crowns, which is 13.4 percent more compared to the previous year.
The decline in the indicative value of new construction was mainly contributed to by non-residential buildings, especially due to the high year-on-year comparative base. In contrast, the indicative value of new residential buildings increased by 19.2 percent. "Prices for construction work and building materials will be among the fastest-growing prices in the economy," stated Next Finance analyst Markéta Šichtařová. Therefore, it is not worth delaying the purchase of construction materials.
Construction offices permitted the construction of 5,116 apartments, which was 846 more than in August 2006. Of these, new construction will result in 4,527 apartments and changes to completed buildings will create 589 apartments. The indicative value of newly approved apartments in residential buildings was 10.7 billion crowns.
In EU countries, according to Eurostat data, construction production increased in July, adjusted for the number of working days, by 0.5 percent year-on-year, of which ground construction increased by 1.1 percent and engineering decreased by three percent. "In engineering construction, the shortage of qualified workers is significantly manifested, which is also related to the problematic provision of the necessary technical capacities," Zamrazilová explained.
Among the member states for which data was available, construction production increased the most in Romania by 26.3 percent, Slovenia by 17.9 percent, and Poland by 17 percent. The most significant decline was recorded in Hungary (a decrease of 14.6 percent) and Germany (a decrease of 3.7 percent).