Business climate index in the construction industry fell by 9.8pts q / q in Q4

The business climate in the construction industry IRG SGH decreased by 9.8 points q / q and amounted to -2.7 points in the fourth quarter of 2021, and increased by 21.5 points in annual terms, informed the Institute of Economic Development of the Warsaw School of Economics (IRG SGH).

In the fourth quarter of 2021, the business climate index in the construction industry IRG SGH (IRGCON) has a negative value of -2.7 points, so it is -9.8 points lower than in the third quarter of this year. This decrease may be related to the beginning of the winter season, The situation in the current quarter should be compared with the fourth quarter of 2020, when a very strong wave of the pandemic caused a significant decline in economic activity, and in the fourth quarter of 2019, the last year before the pandemic, but also with the fourth quarter of 2017, bearing in mind that in that year the economic situation in in the construction industry entered the downward phase. Thus, the current economic situation in construction is better than in the period immediately preceding the pandemic, but still much worse than four years ago, it announced.

The balance of answers to the question about the output of construction industry is positive and equals 10.8 points. The current balance of production is 5.7 points lower than in the previous quarter, but 34 points higher than in the previous year. A high increase in comparison to the situation in the previous year was recorded for both ownership sectors: by 32.9 points for private companies and by 44.4 points for public enterprises. Compared to the fourth quarter of 2019, the same period before the pandemic, the current balance of production is 9.4 points higher, the report also said.

The current quarter is the fourth consecutive quarter of a rapid increase in the prices of construction services. The current total price balance has a high, unprecedented value of 44.9 points. Compared to the fourth quarter last year, the current price balance is 62.1 points higher, compared to the previous quarter by 9.3 points. The measure of price growth in the private sector is the balance equal to 43.7 points and in the public sector - 56.8 points. in total it is 38.1 points, for the private sector 37.9 points and the public sector 46.9 points.

According to the report, the level of investment outlays in construction is still very low. The value of the balance is -21.7 points in total, -24.6 points for the private sector and 4.7 points for the public sector. Compared to the third quarter of this year, the total value of the balance is lower by 13.9 points, while on an annual basis there was an increase, but equal to only 6.4 points. The projected balance of investments in total is -31.3 points, therefore no increase in investment outlays in construction can be expected in the coming quarter.

"When it comes to the nuisance of barriers limiting the production activity of construction companies, high prices of raw materials and materials are in the first place, just like in the previous quarter. However, while in the last quarter this barrier was indicated by 69.9% of the surveyed plants, now this percentage is already 75.2%. The next two barriers that create more and more problems for construction companies are: excessive tax burdens (44.2% now, 36.5% in the previous quarter) and unstable law (43.4% now, 41, 1% in the previous quarter). Construction companies do not expect the severity of the above-mentioned barriers to change significantly in the coming quarter, concluded the report.

Source: Warsaw School of Economics (IRG SGH) and IRSBnews