Analysis of construction - 3. quarter of 2007

In Q3 2007 the growth of construction output stopped. Construction output was adversely affected by decrease in civil engineering caused by the high comparative basis of Q3 2006, delay in the preparation and financing of new civil engineering works, shortage of skilled labour and shortage of certain kinds of building materials that was coming to an end.

• Total construction output was by 0.1% lower compared to Q3 2006
• Situation was mainly affected by decrease in civil engineering (-10.9%)
• Building construction output grew by 5.7%
• Average registered number of employees decreased by 2.0%
• Average monthly nominal wage increased by 6.8%
• The planning and building control authorities granted by 16.1% less building permits
• Approximate value of permitted constructions was by 9.7% lower.

Construction output

Total construction output at constant prices was down by 0.1% year-on-year in Q3 2007. Compared to Q3 2006, construction work volume increased in new construction, reconstruction and modernisation, particularly in building construction where implementation was intensely in progress of developer projects of foreign investors focused mainly on industrial buildings, office buildings and multifunctional centres.

Construction work worth CZK 139 768 million was carried out in Q3 2007. According to a CZSO estimate, small enterprises (up to 19 employees) produced more than third of the total construction output. The core of the construction sector was represented by 2 505 enterprises with 20+ employees which performed construction work priced at CZK 97 237 million, i.e. by 0.3% less than in Q3 2006.

CZK 82 837 million (roughly like in Q3 2006) was spent on new construction, reconstruction and modernization, and CZK 10 659 million (-11.5%) on repair and maintenance. Construction work abroad grew by 42.4%. Other work was down by 41.3%.

The predominating part of output (approx. 91%) was produced by enterprises whose principal activity classified them to building construction and civil engineering (down by 1.3%). The highest rate of growth was recorded in enterprises engaged in building completion (up by 27.7%).

By size group of enterprises defined by number of employees, construction work volume grew in small enterprises (+2.2%) and decreased in medium (-0.7%) and large enterprises (-2.5%).

By institutional sector (ISECTOR), predominating part of output was produced by national private non-financial corporations and foreign controlled non-financial corporations where construction work volume dropped by 0.4% and reached roughly CZK 95 billion.

Construction work carried out by enterprises’ own workers

Construction work carried out by enterprises’ own workers decreased by 0.8% year-on-year in Q3 2007.


Employment

The average registered number of employees working with construction enterprises employing 20+ persons in Q3 2007 was 163.6 thousand (by 2.0% less than in Q3 2006), of which 103.6 thousand were manual workers (by 4.0% less). The number of white-collar workers rose by 1.7% (+981 persons) as a result of increasing developer activities of large construction enterprises.
Employment decreased in more than two thirds of size groups of enterprises. The largest fall was registered in enterprises with 300 to 399 employees (-21.1%). The highest increase was observed in enterprises with 400 to 499 employees (+29.1%).
Building construction and civil engineering employed 131.1 thousand persons (-3.7%), building installation 18.3 thousand (+3.4%) and building completion 5.8 thousand (+6.5%).


Wages

The average monthly nominal wage of employees in construction enterprises with 20+ employees reached CZK 22 037 in Q3 2007, which was by 6.8% more year-on-year. Hourly wage was CZK 151, i.e. by 7.9% higher.
The highest wage increase occurred in enterprises with 100 to 199 employees (+10.5%) and the lowest in enterprises with 1 000+ employees (+2.6%).
Average wage in building construction and civil engineering reached CZK 22 488 (+7.2%), in building installation CZK 21 626 (+7.4%) and in building completion CZK 18 256 (+5.7%).

Labour productivity

Labour productivity per employee in enterprises with 20+ employees increased by 1.7% in Q3 2007. As the number of hours worked decreased by 3.5% year-on-year, labour productivity per hour worked grew faster than labour productivity per employee (+3.3%).


Building permits

The planning and building control authorities granted 32 486 building permits in Q3 2007, which was by 16.1% less than in Q3 2006. Building permits for residential and non-residential buildings decreased by 10.3% and 19.3% respectively year-on-year. There were 2 375 building permits granted in the Hl. m. Praha Region, of which 62.2% were for housing construction.


Approximate value of constructions

The approximate value of constructions permitted in Q3 2007 was CZK 90.6 billion (-9.7% year-on-year). The decrease was affected by the high comparative basis in Q3 2006 when building permits were granted for modernisation and reconstruction in the energy sector and for highway construction. New construction will produce structures valued at CZK 58.8 billion (-8.0%). Renewals and enhancements will make available constructions worth CZK 31.8 billion (-12.7%).
By type of constructions, the largest decreases of approximate value were registered for non-residential buildings (-26.5%), environmental constructions (-25.7%) and other constructions (-3.3%). Approximate value of residential buildings grew by 6.2%.



Floor space

In Q3 2007 the planning and building control authorities permitted buildings with a floor space of 2 480 thousand m ² to be constructed. A year-on-year increase of 1.3% was observed in residential buildings, a decrease of 27.9% in non-residential buildings. The floor space of newly constructed residential buildings fell by 14.1% and of renewals and enhancements dropped by 3.2%. The average floor space of a newly constructed dwelling was 120.4 m2 and approximate value CZK 19.7 thousand per 1m ².