Construction Business Sentiment Index Falls for Second Consecutive Month... July Outlook Index Also Down

The business sentiment index for construction companies declined for the second consecutive month.

The Korea Research Institute for Construction Policy (KRICP) announced on July 4 that last month’s Construction Business Survey Index (CBSI) recorded 73.5, down 0.8 points from the previous month. The CBSI quantifies the business sentiment felt by construction companies. A reading below 100 indicates that more companies view the current business conditions pessimistically, while a reading above 100 means more companies are optimistic.

Lee Jihye, a research fellow at KRICP, explained, "The construction business sentiment in June declined for the second consecutive month, remaining well below the baseline of 100 and continuing a sluggish trend."

Looking at the detailed indices by sector, the funding procurement index fell by 4.3 points to 74.3, and the new orders index decreased by 0.6 points to 68.9. The construction receivables index and the order backlog index rose by 4.2 points and 2.9 points, respectively. The construction progress index also increased by 1.5 points.

By project type, the new orders index for civil engineering rose by 5.1 points to 72.4, and for non-residential construction, it increased by 1.7 points to 67.8. The index for residential construction fell by 8.9 points to 65.7.

By company size, the index for large companies dropped by 7.7 points, while the index for small and medium-sized enterprises rose by 5.1 points. Regionally, the Seoul index edged down by 0.3 points to 89.8, while the index for other regions increased by 1.5 points to 65.3.

Last month, the impact of the new orders index on the comprehensive performance index was 59.0%, up 0.1 percentage points from the previous month. The funding procurement index, which had the second largest impact, accounted for 13.5%, up 0.8 percentage points from the previous month.

Meanwhile, the outlook index for July was surveyed at 70.4, 3.1 points lower than the June performance index. The comprehensive outlook index remained below 100, indicating that a high proportion of respondents continue to have a negative outlook on the construction market.