Construction market climate

2010-08-06



In July 2010 the general market climate indicator for the construction industry increased relative to June (when it had stood at 2 points), to 5.4 points. It was higher relative to July 2009 (by 12.2 points) but lower relative to the analogous month since 2006. The assessments of the current order portfolio, construction and assembly output as well as the financial situations of the construction companies have improved in July. Forecasts pertaining to order portfolio is less upbeat than that of the previous month. Predictions with regard to the construction and assembly output remain unchanged, while those referring to the financial situations of the firms are more optimistic.
In July 2010, 4.5% of the respondents said they encounter no barriers to engaging in business on the Polish construction market, in June 2010 the percentage share of such respondents had stood at 3.7%, and in July 2009 – 4.7%. The greatest difficulties experienced by construction firms related to the competition of other firms (59% of the respondents in July and 58% in June 2010, whereas the proportion stood at 61% in July 2009), the insufficient demand (42% in July and 44% in June 2010, relative to 48% a year before). In comparison with July 2009, the increase was observed in the significance of the labour costs as well as the cost of building materials (from 26% to 28%). The most significant decline was reported for the insufficient demand.
The economic situation of the construction and assembly companies in July 2010 was assessed pessimistically but better than a month before. Only the largest companies (over 250 employees) were upbeat, while the most pessimistic assessments were reported for the smallest units (“micro firms” – up to nine workers). The order portfolio value was growing in July 2010 at a higher rate than a month before and the largest companies (over 250 employees) have reported the most substantial increases, while the smallest companies were experiencing declines. The construction and assembly output was assessed positively in July 2010 and better than in June. The largest companies reported the most significant growths, while the smallest units were experiencing declines. Companies of all sizes were less pessimistic about their current financial situations with the largest firms being those that reported the best assessments.
Firms of all sizes reported that the payment delays were increasing at a similar rate to that observed in June. The most significant delays were experienced by small companies (up to 49 employees).
The forecasts regarding economic situations of the construction and assembly companies in the three subsequent months were optimistic and similar to those of June 2010 with the most upbeat being the large and medium-sized units. The companies expected the order portfolio to grow but at a slower rate than predicted in June. Again, the large and medium-sized firms expected the number of orders increase to be the most substantial.
Also, the construction companies forecast that the construction and assembly output will grow over the next three months at a similar rate as that predicted in June and, again, the most upbeat are the large and medium-sized firms. The financial standing of the companies during the next three months is expected to be good and the forecast is slightly more optimistic tham that of June. As for the prices of the construction and assembly works, companies of all sizes expect a further decline – the largest decrease is predicted by the small firms (between 10 and 49 employees).

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