Construction market climate

2010-01-12



In December 2009 the general market climate indicator for the construction industry declined relative to November 2009 (when it had stood at -11.3 points), to -15.5 points. It was lower relative to both December 2008 (by 9.6 points) and the analogous month of the past five years. Such state of affairs is a consequence of, primarily, the deeper drops than in November in current and future order portfolios, and construction and assembly output, and the resulting deterioration in the financial standing of the surveyed companies.

In December, 4.8% of respondents said they encounter no barriers to engaging in business on the Polish construction market, in November the percentage share of such respondents had stood at 4.5%, and in December 2008 – 5.0%. The greatest difficulties experienced by construction firms related to sector competition (62.7% of respondents polled in December 2009 and 62.1% in November 2009 versus 49.6% in December 2008), as well as labour costs (51.1% in December 2009 and 51.8% in November 2009 versus 56.2% in preceding year). In comparison with December 2008, insufficient demand gained the most in significance as a barrier to doing business in the construction industry (rising from 28.8% to 47.5%), followed by sector competition. Meanwhile, fewer respondents complained about a shortage of qualified employees (from 40.4% to 18.6% versus 19.6% in November).

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 least pessimistic were respondents from large enterprises.

Construction and assembly companies continued to provide bleak forecasts for the next three months; in December 2009 these forecasts were more negative than a month earlier. Respondents anticipate fewer orders and that their order portfolios will shrink by more than they had forecast in November. By company size, the most pessimistic were small companies (with 10 to 49 employees). Order portfolio growth was predicted only by large companies, though even these firms expect lower growth than in the preceding month.
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 November. By company size, the least pessimistic forecasts – once again – were provided by respondents from large enterprises.

Find more news and analyses in internet service Construction Poland Online and pdf newsletter Polish Construction Review.