Construction Companies' Sentiment Recovers to 80 Level After 11 Months: "Improvement in New Orders"

Last month, the Construction Business Survey Index (CBSI) for construction companies recovered to the 80 level for the first time in 11 months. It is analyzed that the improvement in the volume of work, such as progress and new orders, played a key role.

A view of a reconstruction apartment site in Seoul city / Photo by Yonhap News

The Korea Construction Industry Research Institute announced on the 2nd that the CBSI for April recorded 80.2, up 8.0 points (p) from the previous month. This is the first time the index has reached the 80 level since May last year (83.4), 11 months ago.

If the CBSI falls below the baseline (100), it means that more companies view the current construction business situation pessimistically than optimistically, and if it is above 100, it means the opposite.

The CBSI recorded its lowest figure in 12 years and 3 months at 52.5 in November last year. Since then, supported by the government's easing of real estate regulations, it showed a recovery trend by rising 1.8p, 9.4p, and 14.7p respectively until February this year. However, due to the lack of improvement in new orders, it turned downward in March.

Researcher Park Cheol-han explained, "It seems that the recent partial improvement in the volume of work, such as progress and orders, led to the recovery of the CBSI," adding, "In particular, the index rose by 18.2p centered on large companies, which had a decisive impact on the overall index recovery." In fact, the BSI for progress and new orders in April rose by 3.7 points each compared to the previous month.

He continued, "Usually, there is a seasonal effect in April where orders and construction volume increase," but added, "Considering that the index rose more than the average increase of 2.1p in April over the past 10 years, it is judged that the deterioration of the construction business situation has improved."

The CBSI forecast for May is expected to rise by 6.3p to 86.5. Researcher Park said, "New orders are expected to continue improving next month," but added, "However, since the situation of construction payments and financing is not good, it is somewhat uncertain whether the CBSI will show a full recovery by exceeding the mid-80s in May."

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