Analysis of construction - 4. quarter of 2007

In Q4 2007, after a decrease in Q3 2007, construction output grew. Unlike the previous quarters, the rate of growth was determined predominantly by favourable situation in civil engineering where growth was supported by appropriation of money for repair and new construction including reconstruction and modernisation of road and highway infrastructure. Shortage of skilled labour and delay in the preparation and financing of new civil engineering works persisted.

• Total construction output was by 5.3% higher compared to Q4 2006.
• The situation was mainly affected by increase in civil engineering (by 6.4%).
• Building construction output grew by 2.0%.
• Average registered number of employees decreased by 2.1%.
• Average monthly nominal wage increased by 5.7%.
• The planning and building control authorities granted by 18.3% less building permits.
• Approximate value of permitted constructions was by 5.1% higher.

Construction output

In Q4 2007 total construction output at constant prices was up by 5.3% year-on-year. Compared to Q4 2006, construction work volume increased especially in civil engineering in new construction, reconstruction and modernisation of road and highway infrastructure. Intense construction work continued particularly on construction of multi-dwelling buildings.
In the year 2007 total construction output increased by 6.7% (like in 2006) and construction work worth CZK 510 984 was done. The growth was contributed to by building construction (up by 9.7%) whose share in the total volume of construction work carried out by construction enterprises with 20+ employees exceeded fifty per cent. Besides, national construction had to grapple with a number of problems. Mainly in the first half of the year, due to swift construction production, shortage of certain building materials was recorded, which caused among other things jumps in prices.

In Q4 2007 construction work valued at CZK 150 739 million was carried out. According to a CZSO estimate, small enterprises (up to 19 employees) produced roughly a quarter of the total construction output. The core of the construction sector was represented by 2 476 enterprises with 20+ employees which performed construction work priced at CZK 113 289 million, i.e. by 5.1% more than in Q4 2006.

CZK 93 777 million (+3.5% on Q4 2006) was spent on new construction, reconstruction and modernization, and CZK 14 364 million (+5.6%) on repair and maintenance. Construction work abroad grew by 48.3%. Other work was down by 49.7%.

Predominating part of the output (approx. 90%) was produced by enterprises whose principal activity classified them to building construction and civil engineering (up by 4.5%). The highest rate of growth was recorded in enterprises engaged in building completion (up by 21.0%).

By size group of enterprises defined by number of employees, construction work volume in large enterprises grew 6.7%, in medium enterprises by 5.1% and in small enterprises by 4.2%.

By institutional sector (ISECTOR), predominating part of the output was produced by national private non-financial corporations and foreign controlled non-financial corporations where construction work volume grew by 4.5% and reached roughly CZK 110 billion.


Construction work carried out by enterprises’ own workers

Construction work carried out by enterprises’ own workers increased by 3.6% year-on-year in Q4 2007 and by 5.7% in the year 2007.

Employment

The average registered number of employees working with construction enterprises employing 20+ persons in Q4 2007 was 161.6 thousand (by 2.1% less than in Q4 2006), of which 100.9 thousand were manual workers (by 4.2% less). The number of white-collar workers rose by 1.6% (+955 persons) as a result of increasing developer activities of large construction enterprises.
Enterprises with principal activity building construction or civil engineering employed 129.0 thousand persons (-3.9%), building installation 18.0 thousand (+2.3%) and building completion 5.9 thousand (+7.1%).
In the year 2007 the average registered number of employees in construction enterprises with 20+ employees decreased by 1.5% year-on-year to 159.6 thousand. The number of employees in building construction and civil engineering fell by 2.6%. According to professional sources, roughly 5 000 specialised workers are missing. The shortage of skilled workers in construction is caused in particular by termination of state-owned and enterprise secondary vocational schools, promotion of general education, lack of motivation to join the construction labour market, ousting of apprenticeship fields by education with maturita examination.

If we add the above “missing labour force” to the results mentioned, employment figures would be as follows:

• average registered number – up by 1.5% year-on-year,
• of which manual workers – up by 1.3% year-on-year.

Wages

In Q4 2007 the average monthly nominal wage of employees in construction enterprises with 20+ employees reached CZK 23 956, which was by 5.7% more year-on-year. The hourly wage was CZK 165, i.e. by 5.6% higher.
Average wage in building construction and civil engineering reached CZK 24 450 (+6.0%), in building installation CZK 23 719 (+6.2%) and in building completion CZK 19 328 (+8.0%).

In the year 2007 the average nominal monthly wage was CZK 21 914 CZK (+7.9% year-on-year). Monthly wage of manual workers was up by 8.6%. Information from construction enterprises says that skilled workers may receive extra pay because of their shortage. The average hourly wage of employees was CZK 149, i.e. up by 8.0% on the year 2006.

Labour productivity

In Q4 2007 labour productivity per employee in enterprises with 20+ employees increased by 7.4%. Labour productivity per hour worked stood at CZK 1 609 (+7.3% year-on-year).
In the year 2007 labour productivity per employee in enterprises with 20+ employees grew by 7.5%. Labour productivity per hour worked was CZK 1 249 (+7.6% year-on-year).

Building permits

In Q4 2007 the planning and building control authorities granted 30 196 building permits, which was by 18.3% less than in Q4 2006. Building permits for residential and non-residential buildings decreased by 12.4% and 15.7% respectively year-on-year. There were 2 776 building permits granted in the Hl. m. Praha Region, of which 59% were for housing construction.

In the year 2007 the number of building permits dropped by 13.3% year-on-year to 117 384. Decreases were recorded in all regions of the Czech Republic. Building permits for residential and non-residential buildings decreased by 5.0% and 6.0% respectively.


Approximate value of constructions

In Q4 2007 the approximate value of constructions permitted grew by 5.1% year-on-year. The increase was affected especially by financially demanding modernisation and reconstruction of transport infrastructure and of non-residential buildings (e.g. energy industry). New construction will produce structures valued at CZK 62.7 billion (-5.5% year-on-year). Renewals and enhancements will make available constructions worth CZK 36.6 billion (+30.3%).
By type of constructions, the largest increases of approximate value were registered for renewals and enhancements of environmental constructions (+88.1%) and other constructions (+71.1%) In new construction the only increase was observed in residential buildings (+4.5%), The highest decrease were in new construction of non-residential buildings (-16.2%) and in renewals and enhancements of residential buildings (-10.1%).

In the year 2007 the approximate value of permitted constructions was CZK 357.7 billion (-0.9% year-on-year). Growth was recorded in new construction of non-residential and residential buildings (+18.6% and 6.1% respectively). Renewals and enhancements of environmental constructions grew by 30.5% (e.g., modernisation of wastewater treatment plants). All the other types of constructions, both new ones and renewals and enhancements, saw year-on-year decreases. The highest fall was recorded for renewals and enhancements of other constructions (27.6%). Approximate value by quarter of 2007: in Q1 CZK 81.1 billion, in Q2 CZK 86.7 billion, in Q3 CZK 90.6 billion, in Q4 CZK 99.3 billion. Permitted was the construction of 24 structures with approximate value over CZK 1 billion. They are predominantly in transport infrastructure.


Floor space

In Q4 2007 the planning and building control authorities permitted buildings with a floor space of 2 455 thousand m ² to be constructed. A year-on-year decrease of 2.0% was observed in residential buildings, a decrease of 0.8% in non-residential buildings. The floor space of newly constructed residential buildings dropped by 0.3% and the floor space of renewals and enhancements of residential buildings fell by 17.8%. The average floor space of a newly constructed dwelling was 115.8 m ² and approximate value CZK 21.2 thousand per 1m ².

In the year 2007, compared to 2006, the planning and building control authorities permitted buildings with a floor space of 9 074 thousand m2 to be constructed. The year-on-year decrease was 1.2%. The floor space of residential buildings was up by 3.2% and of non-residential buildings down by 5.9%. The floor space of newly constructed residential buildings grew by 5.2% and the floor space of renewals and enhancements of residential buildings decreased by 14.7%. The average floor space of a newly constructed dwelling was 122.7 m ² and approximate value CZK 19.6 thousand per 1m ².