The January decline in construction was mainly caused by worse weather

Prague - The year-on-year decline in construction in January of 5.2 percent was influenced by worse weather and also by a high comparative base from last year, when measures against the spread of the coronavirus had not yet been implemented. A more significant drop was primarily prevented by the construction of infrastructure. This was stated by analysts contacted by ČTK today. According to them, especially larger companies have enough contracts, but the sector is generally lacking workers, especially foreign ones. For this year, they expect a decline in construction of five to six percent.

"As every year, the January results of construction are influenced by the weather, which allows or, conversely, does not allow the continuation of ongoing projects. And therefore, it is no coincidence that the performance of construction is usually the lowest in January of the entire year. This January was certainly not pleasant from a weather perspective," said ČSOB analyst Petr Dufek.

According to him, companies are struggling with a lack of employees rather than a lack of work. And in this regard, the situation is unlikely to change even in the coming months. "The lockdown affects construction only indirectly, and thus the main problem is the availability of qualified and auxiliary workers. So there is no change in this regard," Dufek further stated.

According to Natland analyst Petr Bartoně, the previously widening gap between apartment construction and infrastructure construction somewhat narrowed in January. "Construction is still five percent below normal, but compared to December, it is less saved by mostly state infrastructure contracts, and apartment construction has increased slightly compared to December," he noted. Month-on-month construction production in January rose by 4.2 percent.

UniCredit Bank analyst Pavel Sobíšek stated that January work is significantly affected by climatic conditions, and total production is typically only half of that in an average month. "This year, the performances were undoubtedly affected by the weather. Even though the month was slightly above average in temperature, it was rich in precipitation," Sobíšek pointed out.

While larger construction companies are presumably not yet suffering from a lack of work due to contracts from the distant past, smaller firms are already feeling a slowdown. For this year, he expects a decline in industry production of around five percent.

"The coronavirus pandemic has limited construction production, leading to a limited supply of apartments in the real estate market. The paradoxical result is the rise in property prices during a deep economic crisis, which reduces housing affordability,” added BH Securities analyst Štěpán Křeček.

According to Trinity Bank analyst Lukáš Kovanda, construction will decline by six percent this year. "Its inertia is higher than, for example, in industry, which will significantly recover from the pandemic situation this year," Kovanda stated.