Construction market climate

2010-02-05



In January 2010 the general market climate indicator for the construction industry declined relative to December 2009 (when it had stood at -18.6 points), to -14.7 points. It was higher relative to January 2009 (by 3.3 points) but lower relative to the analogous month of the previous three years (in 2006-2008 the indicator for the construction industry was positive). Such state of affairs is a consequence of, primarily, the deeper drops than in November in current and order portfolio, and construction and assembly output but, at the same time, improvement forecasts of the surveyed companies.
In January 2010, 3.1% of respondents said they encounter no barriers to engaging in business on the Polish construction market, in December 2009 the percentage share of such respondents had stood at 4.8%, and in January 2009 – 4.7%. The greatest difficulties experienced by construction firms related to sector competition (55% of respondents polled in January 2010 and 63% in December 2009 versus 53% in January 2009), as well as labour costs (47% in January 2010 and 51% in December 2009 versus 53% in preceding year) and insufficient demand (47% relative to 48% in December 2009b and 37% in January 2009). In comparison with January 2009, the most substantial gain in significance as a barrier was recorded with regard to insufficient demand. Meanwhile, fewer respondents complained about a shortage of qualified employees (from 32% to 14% versus 19% in December).
In January 2010, regardless of workforce size, companies collected their accounts receivable for the performed construction and assembly works with delays. The payment delays were most significant for small companies (with no more than 49 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. The worst opinions were reported for the smallest companies.
Construction and assembly companies continued to provide bleak forecasts for the next three months; in January 2009 these forecasts were similar as a month earlier. Respondents anticipate fewer orders but that their order portfolios will shrink by less than they had forecast in December. 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 December. By company size, the least pessimistic forecasts – once again – were provided by respondents from large enterprises.

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