International Property News

Building output up 2% in April

13th June 2008

Czech building output grew by 2 percent year-on-year in April, but output adjusted for the number of workdays fell by 0.8 percent, the Czech Statistical Office (CSU) said Thursday.

Compared with 2007, April was two days longer this year. Output rose in new construction, reconstruction and modernisation as well as repairs and maintenance, just like in the previous months.

Building construction output fell by 0.2 percent compared with April 2007.

"The result is very weak, given the previous results of the construction sector and the growth in the other segments of the economy," said CSOB economist Petr Dufek.

The approximate value of construction projects permitted in April 2008 reached Kc31.4bn, a drop of 4.2 percent year-on-year. "The drop was due to a high comparative base" said Komercni banka analyst Kamil Janacek. But Dufek said a high comparative base on its own cannot probably fully explain the low figures.

UniCredit Bank analyst Pavel Sobisek said the era of hectic construction of industrial buildings is slowly coming to an end and projects of non-residential multifunctional centres may start to get delayed as a result of uncertain economic outlooks in Europe.

Planning offices permitted the construction of 3,571 flats in April, an increase of 402 against April 2007.

There were 3,027 new projects (a growth of 294) and 544 modifications (an increase of 108). The approximate value of newly permitted homes was Kc7.7bn.

The average floor area of a newly built home was almost 132 square metres in April and the approximate value was Kc18,100 per square metre.

Month-on-month, seasonally adjusted building output in constant prices fell by 0.1 percent in April.

"Civil engineering, above all transport infrastructure, will take over the leading role from building construction which dominated the building sector in the past period," said Vaclav Matyas, president of the Czech Association of Building Entrepreneurs (SPS).

But analysts said a change of focus on this segment does not have to be without problems.

"The building sector is thus becoming more dependent on the construction of roads, motorways and railway corridors, mostly financed from public sources and EU funds," Sobisek said.

"Although this source of money is not likely run out, the question is the continuity of preparation of new projects," he added.

Staff numbers at companies employing 20 or more people decreased by 0.5 percent year-on-year in April. But the figure does not include employees hired by employment agencies, statisticians said.

The average nominal monthly wage grew by 11.3 percent year-on-year to Kc23,039. In real terms, the monthly wage added 4.2 percent. The average hourly wage was 1.7 percent higher year-on-year at Kc143.

Labour productivity per employee rose by 2 percent, while labour productivity per hour fell by 6.8 percent.

The European Union's statistical office Eurostat said building output adjusted for the number of workdays in the 27-EU dropped by 0.1 percent year-on-year in March, of which building construction fell by 0.8 percent and civil engineering grew by 4.2 percent.

In EU countries whose data were available, building output grew the fastest in Romania (32.5 percent), Poland (17.5 percent) and Slovakia (11.5 percent). In contrast, the biggest drop in the building output index of 10.1 percent was registered in Spain

In March, Czech building output grew by a revised 0.5 percent compared with the estimated increase of 0.8 percent.

Source: PragueMonitor