July construction sentiment improves to highest level in 2 years and 7 months

[Photo by Yonhap]

South Korean builders’ business sentiment measured by the Construction & Economy Research Institute of Korea (CERIK) continued its upward trend, recording a significant increase of more than 10 points last month, reaching its highest level since 92.5 tallied in December 2020.

The country’s construction business survey index (CBSI) stood at 89.8 last month, up 11.4 points from the previous month.

CBSI is a survey-based index calculated from construction companies’ responses, and a reading below 100 indicates that more companies view the current construction business conditions pessimistically than optimistically.

“The improvement in civil engineering and housing contracts and some alleviation of funding difficulties appear to have led to the overall index increase,” said Park Cheol-han, an associate research fellow at the institute.

The index for new orders rose by 1.5 points to 90.9 compared to the previous month, construction backlogs gained by 2.1 points to 83.6, and funding conditions improved by 5.8 points to 75.0.

On the other hand, value of construction declined by 2.1 points to 92.9, and order backlogs fell by 1.8 points to 83.9.

Civil engineering and housing construction orders, excluding non-residential projects, saw an increase of over 5 points compared to the previous month.

By company size, large construction firms experienced a notable increase of 26.7 points, while medium-sized companies rose by 0.5 points. Even small and medium enterprises saw an index rise of 5.9 points.

By region, the CBSI for companies in Seoul rose by 7.7 points to 97.1, while regional companies also saw an increase of 14.6 points, reaching a score of 81.5.

Looking ahead to August, the forecasted index is expected to reach 80.7, indicating a further increase of 0.8 points from July.