September Construction Companies' Sentiment Index Hits Lowest in 2 Years 5 Months... Below 60 for 4 Consecutive Months

"Funding Difficulties and Decline in Large Corporations' Business Sentiment"
Expectations for Index Increase in October with Autumn Order Growth

[Asia Economy Reporter Noh Kyung-jo] The Construction Business Survey Index (CBSI) has remained in the 60s for four consecutive months, recording its lowest level in two years and five months last month. It is interpreted that difficulties in financing and weakened corporate sentiment among large companies contributed to the decline in the index.

The Korea Construction Industry Research Institute announced on the 4th that the CBSI for September recorded 61.1, down 5.6 points (p) from the previous month.

The CBSI fell by 18.7p to 64.7 in June, then recovered by 3.2p in July, but dropped again by 1.2p in August to 66.7. This was the first time since the COVID-19 outbreak from February to May 2020 that the index stayed above 60 for more than three months. The institute had been optimistic that the index would rise in September due to seasonal factors after the hot summer, but there are still no signs of improvement.

The CBSI being below the baseline of 100 means that more companies view the current construction market pessimistically than optimistically, while a value above 100 indicates the opposite.

Researcher Park Cheol-han of the institute explained, "It is common for the index to rise by about 3 to 5 points in September due to an increase in construction projects after the summer off-season, but instead, the index fell significantly. When looking at the data by company size, the new construction orders (BSI) of large companies dropped by 16.7p, which affected the overall index."

The BSI for September was recorded at 73.2, up 3.2p from August, ending a six-month downward trend. However, by company size, the BSI for large companies fell sharply, and small and medium-sized enterprises (SMEs) also declined by 3.1p compared to the previous month. Only mid-sized companies saw an increase of 3.4p.

The financing index was also recorded at 72.0, the lowest in two years and four months. Researcher Park noted that this 15.0p drop from the previous month indicates that companies are facing increased difficulties in financing.

Meanwhile, the CBSI forecast for October is expected to rise by 17.1p to 78.2. Researcher Park said, "Due to a statistical rebound effect and the seasonal increase in orders during autumn, the index is expected to rise by more than 10 points. However, it is unlikely to exceed the 80 mark."