Construction output accelerates sharply

2010-08-06

June proved a very good month for construction companies in Poland, bringing acceleration in construction and assembly output growth to nearly 10%. Further growth in construction output is expected in the second half of the year, due in large part to a higher number of new residential starts. The data on construction permits show, however, that it is not yet time to speak of stable revival in residential construction.

In June construction and assembly output in Poland grew for the second time this year to reach a value of nearly PLN 7.5 billion. On this occasion the growth was much stronger, at 9.6% on June 2009. This was thanks to growth in all three categories of construction firms, though the highest increases were generated by companies in the building erection and specialist work segments (growth of 13%). This second consecutive month of improvement in the situation in construction is also reflected in the fundamental sector indicators – growth in employment, pay and price levels in construction is markedly gathering speed.



Recent months have seen a rise in the number of new residential starts (almost 20% y-o-y in the period Jan-Jun), which has been a major factor in the higher value of construction output among companies that erect buildings. Unfortunately this cannot yet be seen as the beginning of a long-term revival in residential construction, a fact that is clearly indicated by the data on permits for new residential projects, which are still negative among both developers and individual investors (declines in H1 of 13.1% and 2.7% respectively). What this means is that the increases in numbers of residential construction starts are based above all on previously obtained construction permits and restarts of stalled projects. Nevertheless, the fact that business has for some time been brisk in design studios should shortly translate into positive data for construction permits.



Bartłomiej Sosna
Senior Construction Analyst
PMR Publications

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