The latest data released by the Czech Statistical Office (CSU) indicates a notable 5.9% year-on-year decline in construction production for January, attributing the drop primarily to a high comparative base from the previous year. Despite this downturn, there was a discernible rise in engineering construction activities, encompassing projects such as road construction, telecommunications, and energy networks. On a month-on-month basis, construction production exhibited a modest increase.

A closer examination of the figures reveals that the CSU has revised the data for December, thereby mitigating the year-on-year decline from the original 4.6% to 3.4%. Head of the Department of Construction and Housing Statistics at CSU, Petra Cuřínová, noted that the nearly six-percent year-on-year decline in January was largely offset by the positive performance of engineering construction, which saw a 1.4% increase, while building construction experienced an 8.3% decline.

Radek Matějka, Director of the Department of Agriculture and Forestry, Industry, Construction, and Energy Statistics at CSU, elucidated that the indicative value of issued building permits dipped by 12%, amounting to 40.3 billion crowns, primarily due to reductions in non-residential building projects and transport infrastructure.

Despite a notable uptick in the commencement of flats, with a nearly 30% increase compared to the previous year, there was a corresponding decrease of almost 28% in the completion of flats. Petr Dufek, the leading economist at Banky Creditas, cautioned against overestimating January’s construction figures, citing seasonal fluctuations and the marginal contribution of January’s activities to the annual construction output.

Looking ahead, there are promising signs in apartment construction, yet uncertainties persist regarding whether this signals a reversal of the negative trend in construction. Dufek emphasized the significance of forthcoming data to ascertain the trajectory of the sector, highlighting factors such as more favorable financing conditions and construction material prices, albeit acknowledging persistent challenges in labor availability. The forthcoming months will be instrumental in gauging the resilience and recovery potential of the construction industry amidst evolving market dynamics.

Article by Prague Forum