The Largest Growth in Construction Work Since Late 2016

The volume of construction work in January of this year was 6.8 percent higher than in the same month last year, marking the largest growth since December 2016, according to preliminary data from the Croatian Bureau of Statistics (DZS).

According to the DZS’s preliminary seasonally and calendar-adjusted data, the index of construction work volume in January was 0.9 percent lower compared to December of last year.

On an annual basis, however, it increased by 6.8 percent, with the volume of work performed on buildings in January, compared to the same month last year, increasing by 12.0 percent, while work on other constructions decreased by 0.3 percent.

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Official statistics include other constructions that are not buildings, such as roads, railways, pipelines, bridges, dams, sports fields, etc.

DZS data shows that in January of this year, 56.9 percent of working hours on construction sites were spent on new construction, while 43.1 percent were on reconstructions, repairs, and maintenance.

Of this, 53.4 percent of working hours were spent on buildings, and 46.6 percent on other constructions.

HGK: Continued Growth is Volatile and Insufficient

As noted by the Croatian Chamber of Economy (HGK), this is the highest growth since December 2016, but they emphasize that such a growth dynamic is primarily a result of an extremely low base, meaning that in January of last year, due to unfavorable weather conditions, a very low level of construction activity was achieved, so the real shift in the level of construction activity in January of this year is significantly more modest.

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– A stronger and more stable growth of construction activity continues to be hindered by the low volume of work on infrastructure projects, whose continuity of year-on-year decline has now stretched to the last nine months, states the HGK’s commentary.

They note that in some EU countries, especially neighboring countries, an exceptionally high annual growth in construction activity was recorded in January of this year, with some cases showing historically high growth rates. Thus, the year-on-year growth in construction activity in Slovenia was 76.0 percent, Hungary 43.1 percent, the Czech Republic 33.6 percent, and Poland 31.8 percent, influenced by a low base, solid economic growth dynamics, and the use of EU funds.

The HGK assesses that the data on the volume of construction work in Croatia suggests a continuation of construction activity growth that is volatile and insufficiently intense, structurally burdened by divergent trends in high-rise and low-rise construction.

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– Therefore, stimulating the construction of infrastructure projects supported by more efficient use of EU funds could increase and stabilize the growth of construction activity in the future, which will continue to be hindered by unresolved issues in the construction sector, especially the lack of adequate labor, concludes the commentary.