International Property News

Building output grows by 11.5% in February

14th April 2008

Czech building output rose by 11.5 percent year-on-year in February, and adjusted for the number of workdays it added 10.3 percent, the Czech Statistical Office (CSU) said Friday.

Seasonally-adjusted building output was 2.4 percent higher over January. In February last year the sector rose by 32.1 percent on the year.

Building output reported a big year-on-year growth in new constructions, reconstructions and modernisations as well as in repairs and maintenance. They were mostly costly projects of the construction of new roads and motorways including their reconstruction and modernisation, the CSU said.

In a year-on-year comparison, civil engineering output moderately increased. Construction work abroad dropped for the first time in the period exceeding one year.

"Construction obviously got a second wind after weaker figures in January," said UniCredit Bank analyst Pavel Sobisek. "Construction demand is driven by relatively cheap loans and a slowly rising EU money inflow to finance infrastructure, and by other public money," said CSOB economist Petr Dufek.

The planning and building control authorities granted 8,608 building permits in February 2008, a growth of 5.5 percent year-on-year.

Approximate value of constructions permitted in February 2008 increased by 16.5 percent in comparison to February 2007 and reached Kc29.3bn. New construction is valued at Kc21.0bn (up by 18.8 percent).

Analysts described as a key indicator the growing value of newly-signed contracts.

Contracted construction work carried out by construction enterprises with 20+ employees increased by 10.9 percent year-on-year at constant prices. New construction, reconstruction and modernisation recorded an 11.7 percent increase, of which building construction grew by 0.5 percent and civil engineering by 46.2 percent. Repair and maintenance increased by 11.5 percent.

"In civil engineering, the trend of intensive railway modernisation continues," Skanska CS spokesman Ondrej Such told CTK. Railways outside the corridors are also modernised, he said.

The number of employees in construction enterprises with 20+ employees rose by 0.7 percent against February 2007. The average monthly nominal wage of employees increased by 16.7 percent year-on-year to Kc20,859, and real wage increased by 8.6 percent. The average hourly wage grew by 6.7 percent year-on-year to Kc145. Labour productivity per employee increased by 10.1 percent and labour productivity per hour worked grew by 0.7 percent.

Sobisek said the wage growth figure is worthy of attention among the released data. A similar development is also seen in industry and so it seems that labour force becomes more expensive in proportion to its falling free capacity, said Sobisek.

Dufek described the pay rise as moderate because it is lower than labour productivity growth.

The planning and building control authorities permitted the construction of 3,364 dwellings, which was by 395 dwellings more (+13.3 percent) than in February 2007. Out of that, 2,917 dwellings will be obtained by new construction and 447 dwellings by renewals and enhancements. The approximate value of newly permitted dwellings in multi-dwelling buildings was Kc7.0bn.

Global stock market turbulences will not jeopardise the construction sector growth, analysts say. Construction will be reporting good results also in the months to come, said Dufek.

According to Eurostat News Release, construction output in the EU27 adjusted for the number of workdays increased by 0.7 percent year-on-year in January 2008. Slovak building output rose by 14.9 percent.

Source: Prague Monitor