Construction orders rebounded sharply in March on simultaneous increases in the public and private institutional sector, but with construction costs rising and weakness in private building persisting, business sentiment in the construction industry remained sluggish.
According to the Korea Research Institute for Construction Policy on the 13th, construction orders in March totaled 21.4 trillion won, up 28.3% from the same month a year earlier. Public orders rose 57.8% on the early execution of the social overhead capital (SOC) budget, and private orders also increased 21.4% on the back of large projects.
By contrast, the actual business cycle at construction sites remained weak. Construction progress payments in March were 12.3 trillion won, down 2.5% from a year earlier. The public and civil engineering institutional sector grew, but ongoing slumps in the private and building institutional sector limited the recovery.
Labor indicators also worsened. The number of people employed in construction in March was 1,916,000, down 0.8% from the same period last year.
The burden of construction costs is also continuing to grow. The construction cost index in March was 134.4, up 2.5% from a year earlier. Analysts said that despite mixed movements in material prices, the overall upward trend in construction costs continued.
Sentiment deteriorated again. The construction business survey index (CBSI) in April was 65.2, down 2.6 points from the previous month. As material supply conditions worsened and funding burdens grew, industry sentiment appeared to have weakened.
Lee Ji-hye, a research fellow at the Korea Research Institute for Construction Policy, said, "Order performance was solid, but it was largely driven by large projects and policy effects," and noted, "With declines in progress payments and continued weakness in private building, the recovery in the construction economy remains limited."