"COVID-19 Resurgence... Negative Economic Sentiment Strengthens" Slight Decline in December Construction Business Index

[Asia Economy Reporter Yuri Kim] In December last year, the Construction Business Survey Index (CBSI) for construction companies slightly declined compared to the previous month, remaining in the low 80s. Despite an improvement in volume conditions, negative economic perceptions were strengthened due to the resurgence of COVID-19.

According to the Korea Construction Industry Research Institute on the 4th, the CBSI in December 2020 recorded 84.6, down 0.7 points from the previous month. The CBSI showed signs of recovery for three months from September to November 2020, but in December, it declined compared to the previous month, showing a somewhat sluggish trend. Researcher Park Cheol-han of the institute said, "Although the volume of construction projects improved compared to the previous month, negative economic perceptions appear to have been strengthened due to the resurgence of COVID-19."

Researcher Park said, "Typically, in December, the index rises by about 2 to 7 points due to the seasonal increase in year-end construction volume, but unusually, it slightly decreased. In fact, both new construction orders and the construction work progress BSI in December exceeded the baseline of 100, indicating an improvement in volume conditions. Nevertheless, the overall index declined because negative economic perceptions were strengthened due to the third wave of COVID-19 in December," he added. Above all, the decline in the BSI index of large companies had a significant impact. Large companies, which have to manage numerous sites, were observed to have faced greater difficulties in responding to the COVID-19 outbreak.

The index for January this year was forecasted to fall 5.2 points from the previous month to 79.4. Researcher Park said, "Typically, in January, the CBSI declines due to the seasonal decrease in construction orders compared to the end of the previous year, and it seems this effect was reflected."

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