Construction Market Hit by COVID-19 and Heatwave... July CBSI Records Largest Drop in 11 Years

Construction Business Sentiment Index (CBSI) at 92.9, Down 7.9 from Previous Month

Overall CBSI Trend

The construction sentiment, which showed a favorable trend in the first half of this year, has significantly declined due to the impacts of COVID-19 and the heatwave.

On the 2nd, the Korea Construction Industry Research Institute (KICRI) announced that "the Construction Business Survey Index (CBSI) for July recorded 92.9, down 7.9 points (p) from the previous month." The 7.9-point drop is the largest decrease in 11 years since July 2010 (-8.1 points).

If the CBSI falls below the baseline of 100, it means that more companies view the current construction market pessimistically than optimistically.

The CBSI showed a recovery trend in the first half of this year, surpassing the baseline (100) in May and June, showing a favorable outlook. However, last month it dropped nearly 8 points, falling below the baseline and showing a sluggish performance.

The average temperature in mid-July this year recorded the highest level in 27 years since July 1994. The unusual heatwave appears to have intensified difficulties at construction sites compared to previous years.

Additionally, since July 6, with over 1,000 confirmed COVID-19 cases daily, the uncertainty caused by the fourth wave of the pandemic is analyzed to have decisively influenced the index decline.

Park Cheol-han, a research fellow at KICRI, said, "The index seems to have dropped due to the increased difficulties at sites caused by the unusual heatwave combined with the uncertainty from the COVID-19 pandemic."

The new construction orders index rose by 0.5 points from the previous month to 104.7, and the construction work progress index increased by 5.8 points to 102.3.

KICRI stated, "The index appears to have declined due to factors other than the volume of construction work," citing the heatwave and the fourth wave of COVID-19 as causes.

The CBSI outlook index for August was recorded at 91.9, down 1.0 point from July, indicating that many companies are concerned about further deterioration in the construction market.

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