Analysis of the development of construction - 2. quarter of 2004

Publication Date: 10. 08. 2004

Product Code: e-8216-04

Construction in the 2nd quarter of 2004

The unusually high growth of construction, which occurred in the 1st quarter of 2004, continued in the 2nd quarter – the output increased by 17.5% y-o-y, there were two working days more.
The fast growth of construction output in the 2nd quarter of 2004 was particularly influenced by the following:
- intense continuation of work on constructions of transport infrastructure (railway corridors, by-pass roads, the metro in Prague);
- expansion of new developer projects of business and administrative centres;
- increased extent of housing construction work supported by considerably rising mortgage loans and saving-in-building-society loans;
- constructions for manufacturing and other purposes for foreign investors;
- higher number of working hours (two working days more than in the 2nd quarter of 2003).

The data reported in individual months of the 2nd quarter of 2004 were strongly affected by a different VAT imposed on construction work (except for housing construction) as from 1 May 2004. Construction companies recorded an extremely high growth (pre-invoicing and after-invoicing of construction work) in April, which was offset by a moderate decrease in construction output in May and June.

Construction output

Growth and structure of construction work in the 2nd quarter of 2004 by size of enterprises

Size of enterprises by number of employees	Structure by construction work volume, %	Index, %
Up to and incl. 19	33.7	118.8
20 to 99	25.2	126.1
100 to 199	8.2	115.8
200 to 299	5.7	126.9
300 to 399	3.0	125.7
400 to 499	1.8	111.5
500 and over	22.4	105.6

2nd quarter growth in the individual segments of the construction market:

- repair and maintenance + 9.7 %
- new construction, reconstruction and modernisation + 16.8 %

- civil engineering + 17.2 %
- building + 13.9 %

Employment

Construction enterprises with 20+ employees in the 2nd quarter of 2004 employed 157.5 thousand persons (+3.7% y-o-y), of which 103.9 thousand (+3.4% y-o-y) were manual workers.

Wages

The average monthly nominal wage in enterprises with 20+ employees reached CZK 17 865 (+6.3% on the 2nd quarter of 2003) and hourly wage was CZK 112 (+2.1%). In the 2nd quarter of 2004, employees of construction enterprises (on average per employee) worked 19 hours more than a year earlier. The average monthly wage of engineers was up 6.8% and of manual workers up 5.8% on the 2nd quarter of 2003. The highest average monthly wage was paid in enterprises with 1 000+ employees (CZK 25 408).

Labour productivity

Labour productivity in enterprises with 20+ employees was by 12.6% (constant prices) higher than in the 2nd quarter of 2003. Hourly labour productivity grew by 8.1%. Unit wage costs dropped by 5.6%.

Building permits

Planning and building control authorities granted 41 817 building permits in the 2nd quarter of 2004, which was by 8.2% more y-o-y. The approximate value of constructions permitted reached CZK 78.2 bn (+16.0%), of which:

- residential buildings CZK 25.8 bn (+18.5%)
- non-residential buildings CZK 26.0 bn (+19,5%)
- environmental constructions CZK 6.0 bn (+5,6%)
- other CZK 20.4 bn (+12,0%)

The higher volumes of the approximate values of constructions of residential buildings were affected by a favourable situation on the mortgage-loan and saving-in-building-society markets, while the higher volumes of the approximate values of other constructions were influenced by building permits granted on large constructions of transport infrastructure.

Housing construction

Planning and building control authorities permitted 11 036 new dwellings for construction in the 2nd quarter of 2004, which was by 21.0% more y-o-y. New construction applies to 8 531 dwellings, predominantly in residential buildings (8 422 dwellings). In total, 2 505 dwellings will come into being by renewals and enhancements; the number of newly permitted dwellings in non-residential buildings grew significantly (546 dwellings, as against 255 in the 2nd quarter of 2003). These dwellings will be, for example, conversions from barracks, spaces designed for manufacturing, etc. Out of the total number of permitted dwellings, 10 381 will be built in residential buildings and 655 in non-residential buildings.
The approximate value of dwellings newly permitted for construction in residential buildings reached CZK 20.4 bn, which was by 20.6% more y-o-y. The average acquisition value of a new dwelling in a new residential building amounts to CZK 2.18 million, whereas a new dwelling based on renewal or enhancement of existing residential building costs CZK 1.05 million.
As far as the territorial distribution is concerned, the highest numbers of dwellings are in the long term being built in the vicinity of big cities, particularly around Prague and in the Středočeský Region, where the construction of 3 851 new dwellings started in the 2nd quarter of 2004. Least dwellings will be built in the Karlovarský Region (252). If related to population, the Ústecký and Moravskoslezský regions will build least dwellings.