Construction in the Czech Republic dropped by 16 percent in February, the largest decline in two years

Prague - Construction production in the Czech Republic accelerated its year-on-year decline to 16 percent in February, marking the largest drop in nearly two years. The freezing weather limited construction, the Czech Statistical Office reported today. According to statisticians, the number of issued building permits decreased in February, and there were also fewer initiated and completed apartments.
    After adjusting for the impact of the number of working days, domestic construction production in February fell by 17.2 percent compared to February last year. Adjusted for seasonal influences, it was down 2.4 percent compared to January. "The decline in construction production was partially influenced by extremely low temperatures, which temporarily halted work on some projects," the statisticians stated.
    In civil engineering, construction production decreased by 11.3 percent year-on-year in February, while engineering construction production fell by 30.2 percent.
    The number of issued building permits decreased by 4.9 percent year-on-year to 6,774. The indicative value of these constructions dropped by nearly half year-on-year to 21 billion crowns, which is partially due to a high comparative base from February 2011.
    According to the Union of Construction Entrepreneurs, the decline in the value of new constructions is related to the fact that no large projects have been initiated in recent years. "The Union of Construction Entrepreneurs in the Czech Republic does not expect a significant turnaround for the better in the coming months of this year," said its secretary Michael Smola.
    "The main reason for the decline was the increase in the lower VAT rate. Many works were invoiced as early as December. Therefore, construction falsely grew by 14.5 percent at that time. However, the work was actually completed later," stated Vladimír Pikora from Next Finance. He noted that production has decreased by 38.4 percent this year compared to January and February 2008, when the economy was rapidly booming.
    The number of initiated apartment constructions in February decreased year-on-year by 11.9 percent to 1,845 units. The number of initiated apartments in residential buildings fell by 46.6 percent, while in family houses it rose by 12.6 percent. The number of completed apartments dropped by 2.2 percent to 2,091, with more than two-fifths decreasing in residential buildings, while in family houses it increased by almost eight percent.
    "Even if the weather improves in the coming months and builders catch up on winter delays, the overall results for this sector will again be very weak this year," predicts ČSOB analyst Petr Dufek. "This will mark the fourth consecutive year of decline in Czech construction," he added.
    The average number of employees in construction companies with 50 or more employees decreased in February year-on-year by 4.6 percent. The average monthly nominal wage for these employees increased by 4.8 percent to 26,346 CZK.
    In the 27 countries of the European Union, construction production, according to Eurostat data, fell by one percent year-on-year in January after adjusting for the impact of the number of working days. Civil engineering decreased by 0.8 percent, and engineering by 1.4 percent.