Construction market climate

2009-12-15



In November 2009 the general market climate indicator for the construction industry declined in comparison with October (when it had stood at -7.5 points), to -11.3 points. It was lower relative to both November 2008 (by 16.9 points) and the analogous month of the past five years. Such state of affairs is a consequence of, primarily, deeper drops in current and future order portfolios and construction and assembly output, and the resulting deterioration in the financial standing of the surveyed companies.

In November 2009, 4.5% of respondents said they encounter no barriers to engaging in business on the Polish construction market; in October the percentage share of such respondents had stood at 4.9%, and in November 2008 – 5.4%. The greatest difficulties experienced by construction firms related to sector competition (62.1% of respondents polled in November 2009 and 63.5% in October versus 51% in November 2008), insufficient demand (46.5% in November, 45.4% in October 2009 versus 24.9% in November 2008) as well as labour costs (51.8% in November and 50.9% in October 2009 versus 58.7% in the preceding year). In comparison with November 2008, insufficient demand and competition from other firms grew the most in significance as barriers for construction and assembly companies. Meanwhile, fewer respondents complained about a shortage of qualified employees (from 44.7% to 19.6% versus 20.7% in October 2009).

In November 2009, regardless of workforce size, companies collected their accounts receivable for the performed construction and assembly works with delays. The payment delays were least significant for large companies (with 250+ employees). Respondents remained negative about their companies’ financial standing, more negative than a month earlier. By company size, the most pessimistic were respondents from micro enterprises (with not more than nine persons on staff).

Construction and assembly companies continued to provide bleak forecasts for the next three months; in November 2009 these forecasts were more negative than a month earlier. By company size, the least optimistic were micro companies. Only large companies (with 250+ employees) saw better economic standing in their future.
Furthermore, respondents expect their companies’ order portfolios to contract, more considerably than forecast in October 2009. By company size, the most pessimistic were respondents from micro firms. Large companies expect their portfolios to expand.

The surveyed companies are of the opinion that in the next three months construction and assembly output will be downsized more markedly than they had anticipated in October. By company size, micro companies see the bleakest future; only large companies expect output growth, though the anticipated growth is not as large as forecast a month earlier.

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