Construction in the Czech Republic is growing, up 7.8% in June

Prague - Construction in the Czech Republic continues to grow, although the pace has slightly slowed. In June, construction output rose by 7.8% year-on-year after an 11.9% increase in May. It was mainly driven by engineering constructions, and there was also an increase in started and completed apartments. Authorities also issued more building permits than a year ago. This was reported today by the Czech Statistical Office.
    When adjusted for the number of working days, construction increased by 6.4% year-on-year, with this year’s June having one additional working day compared to last year. Month-on-month, construction output adjusted for seasonal effects decreased by 1.4%.
    Thus, the decline in Czech construction output compared to the pre-crisis year 2008 is now only just under 20%, which, according to chief economist Roklen Lukáš Kovanda, is a relatively favorable figure compared to the situation in recent times. "Engineering construction is supported by the fiscal expansion of the government backed by the influx of funds from European Union funds. The market for new apartments is benefiting from an environment of unprecedentedly low-interest rates, which signals historically record-low mortgage loans," he stated.
    According to ČSOB analyst Petr Dufek, construction is successfully reducing the declines accumulated during the six-year recession in this sector. He also attributes this success mainly to engineering construction, i.e. public contracts directed towards transport infrastructure.
    However, the June results did not bring only positive news, according to Lukáš Hendrych from the consulting network BDO. "State investment has slowed this year, and the continuing decline in newly announced public contracts will certainly be reflected in future construction output," stated Lukáš Hendrych from the consulting network BDO.
    Production in building construction decreased by 2.4% year-on-year in June, whereas engineering construction increased by 31.2%.
    In the sixth month, builders started the construction of 3,350 apartments, which was an increase of 37.6% year-on-year. The number of completed apartments increased by 15.9% compared to last June to 2,031. At the same time, the number of building permits issued rose by 3.4%, with authorities issuing 7,418. The indicative value of these constructions reached 24 billion crowns, which was five percent higher compared to June 2014.