The Downward Trend in Construction Production Deepens in January

Construction production in January declined by 5.9 percent year-on-year. The Czech Statistical Office (CSU) attributed this drop primarily to a high comparative base released last Friday. However, a rise was recorded in engineering construction, including building roads, telecommunications, and energy networks. Month-on-month, construction production was a straight percentage higher.

The CSU also revised the data for last December, mitigating the year-on-year decline in construction from the original 4.6 percent to 3.4 percent. According to statisticians, the nearly six-percent year-on-year decline in January was due to a high comparative base. “The decline was mitigated by engineering construction, which recorded a year-on-year increase of 1.4 percent, while the production of building construction (building construction) fell by 8.3 percent,” added Petra Cuřínová, head of the Department of Construction and Housing Statistics CSU.

The indicative value of issued building permits reached 40.3 billion crowns and fell by 12 percent, explained Radek Matějka, director of the Department of Agriculture and Forestry, Industry, Construction, and Energy Statistics CSU. This was due to the construction of non-residential buildings and transport infrastructure.

Compared to last year’s period, nearly 30 percent more flats were started, but almost 28 percent fewer flats were completed. “January numbers in construction are not worth overestimating. Firstly, not much is built at this time, so their share of the annual result is almost negligible; secondly, they are always in the wake of weather fluctuations. For example, it would look better in this sector if it were more favorable. Therefore, this year’s first decline is rather just the result of a high comparative base from last year,” commented the January statistics of the leading economist of Banky Creditas Petr Dufek.

Promisingly, the numbers in apartment construction look hopeful. However, it remains a question whether this is just a fluctuation or if the negative trend in construction is indeed starting to reverse. “Data from the following months will show this. As a support for construction this year, cheaper financing and more affordable mortgages will work. Prices of construction materials could also be more favorable. However, people will still lack in construction,” he added.