Construction Business Sentiment Index Rises, but Sluggishness Persists [Real Estate AtoZ]

Although construction companies felt a slight improvement in business conditions last month, the overall sentiment remains weak.

According to the Korea Institute of Construction Industry (KIC), the Construction Business Survey Index (CBSI) for last month rose by 5.9 points from the previous month to 72.2. If the index is below the baseline of 100, it indicates that more companies have a pessimistic outlook on the construction market. If it is above 100, it means optimism prevails.

Lee Ji-hye, a research fellow at KIC, stated, "The construction business sentiment in November recovered part of the previous month's decline, but continued to fluctuate around the 70-point level."

Among the detailed indices, the Work Progress Index recorded the largest increase, rising 19.2 points from the previous month to 92.7. The Receivables Index rose by 8.5 points to 85.4, the Order Backlog Index increased by 6.6 points to 75.4, and the New Orders Index climbed 5.7 points to 69.7.

By construction type, the New Orders Index for civil engineering fell by 3.6 points to 62.0. However, the index for housing rose by 15.2 points to 74.7, and for non-residential buildings by 5.7 points to 70.6.

By company size, the index for large companies dropped by 6.0 points to 85.7, while the indices for mid-sized and small companies increased by 13.1 points to 72.4 and by 10.4 points to 58.5, respectively. The Seoul Index fell by 4.9 points to 79.9, whereas the Regional Index rose by 14.1 points to 67.6.

The outlook index for December is projected at 72.9, which is 0.7 points higher than last month's actual index.

Research fellow Lee added, "Typically, there is a tendency for new orders to increase at the end of the year due to expanded budget execution and the finalization of business plans in the private sector. This is expected to have a positive effect on the short-term performance index. However, structural constraints such as interest rates and construction costs still persist."