October Construction Companies' Sentiment Hits Lowest in 9 Years 8 Months... "Impact of PF Insolvency Concerns"

CBSI Records 55.4... Lowest Since February 2013 (54.3)
No Seasonal Effect or Rebound... Mid-sized Companies' Sentiment Severely Contracted

[Asia Economy Reporter Noh Kyung-jo] The Construction Business Survey Index (CBSI), which had remained around the 60 mark for four consecutive months, has dropped to the 50 level. This is interpreted as being influenced by concerns over the potential default of the real estate project financing (PF) linked to Legoland in Gangwon-do.

The Korea Construction Industry Research Institute announced on the 31st that the CBSI for October recorded 55.4, down 5.7 points (p) from the previous month. This is the lowest figure in 9 years and 8 months since February 2013 (54.3).

The CBSI has decreased for three consecutive months since August. The institute had been optimistic that the index would rise from September due to seasonal effects after the hot summer, but there are no signs of improvement.

The CBSI indicates that if the index falls below the baseline of 100, more companies view the current construction market pessimistically than optimistically; if it is above 100, the opposite is true.

Researcher Park Cheol-han of the institute analyzed, "It appears that the perceived market conditions have worsened due to concerns over real estate PF defaults," adding, "The significant contraction in the sentiment of mid-sized construction companies had a decisive impact on the index decline."

In fact, the new construction orders index (BSI) for October fell 6.8p from the previous month to 66.4, with mid-sized companies plunging 18.9p. Small and medium-sized enterprises also dropped 6.9p compared to the previous month. Only large companies saw an increase of 8.4p.

The construction payment index also fell 3.1p to 87.0. The financing index, which hit its lowest point in 2 years and 4 months last month, rose 1.0p to 73.0.

Meanwhile, the CBSI forecast for November is expected to rise 10.8p to 66.2. Researcher Park said, "Due to a statistical rebound effect from the index being only in the mid-50s and the seasonal increase in orders during autumn, the November index is expected to rise by more than 10 points," but added, "However, it is unlikely to exceed the 60 mark."

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