"Construction Industry Also Hit by COVID-19"... Local and Small Construction Companies Face 'Cloudy' Outlook

February CBSI Falls Below 70... Lowest February Figure in 7 Years

[Asia Economy Reporter Yuri Kim] The Construction Business Survey Index (CBSI) for February fell below the 70-point mark. This is the lowest figure in seven years for the month of February. Due to difficulties in starting and progressing construction projects caused by the COVID-19 pandemic, the BSI declined mainly among local and small-to-medium construction companies.

According to the Korea Construction Industry Research Institute on the 2nd, the CBSI for February recorded 68.9, down 3.2 points from the previous month. The CBSI showed a favorable trend in December last year, reaching 92.6, the highest in four years and five months, but plunged sharply by 20.5 points to 72.1 in January. In February, it further decreased by 3.2 points to 68.9, marking two consecutive months of decline. The 68.9 level is the lowest for February in seven years, indicating that the perceived business conditions of construction companies are very poor.

Meanwhile, the sluggish construction market due to COVID-19 was also confirmed. Overall construction orders decreased, and local and small-to-medium construction companies faced difficulties in starting and progressing some projects due to the COVID-19 situation. The BSI for new construction orders fell by 10.7 points, with the order slump directly impacting the index decline. The COVID-19 pandemic was also analyzed to have had some influence.

Despite the decline in the BSI for new construction orders, the BSI for order backlogs slightly increased by 0.7 points. This suggests that construction companies are experiencing difficulties in starting and progressing some projects due to the COVID-19 pandemic. In particular, there was no change among large and medium-sized companies, but the BSI for small-to-medium companies dropped by 10.7 points, and the BSI for local companies (-5.0 points) fell more than that for Seoul-based companies (-1.4 points). Ultimately, it can be concluded that local and small-to-medium construction companies are in a difficult situation.

The index for March is expected to rise by 19.6 points from February to 88.5. Park Cheolhan, a senior researcher at the Korea Construction Industry Research Institute, analyzed, "The forecasted nearly 20-point increase in the index reflects the seasonal effect of increased orders in spring as well as expectations that construction project volumes will increase as part of measures to stimulate the sluggish construction market." However, he explained that if the spread of COVID-19 prolongs, the actual index is likely to be lower than this forecast.

This content was produced with the assistance of AI translation services.