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According to the EFL (the European Leasing Fund) barometer, the construction industry is in the best state since the start of the pandemic. The industry can also boast the best results compared to other sectors. Half of construction companies expect sales to increase, and a third of them say the COVID-19 pandemic could be a catalyst for future growth, according to the European Leasing Fund’s barometer for Q3 this year.
The EFL barometer reading has passed the limited development threshold of 50 points. The barometer sub-index for the third quarter of this year for the construction industry amounted to 52.9 points, i.e. a 1 percentage point more compared to the previous quarter. This is the highest figure since the start of the pandemic. Good sales forecasts had the greatest impact on such a positive reading. Half of construction entrepreneurs expect growth, and only 3 percent a decrease in turnover.
According to the barometer, as many as 37.5 percent of entrepreneurs expect an improvement in financial liquidity. Despite this, most of the respondents, as much as 77.5 percent, do not plan new investments, and only 4 percent plan to invest more in the coming months. 37.5 percent forecast a lower demand for external financing, 2.5% signal an increase in such demand. The president of the EFL board, Radosław Woźniak, points out, however, that the industry is very much in motion. “From January to June 2021, leasing companies financed construction equipment worth nearly PLN 2 billion, which means an over 37 percent increase compared to the same period last year”, he reports.
Optimistic outlook of the construction copmanies
Along with HoReCa, construction is one of the two industries that recorded an improvement in the mood in the latest barometer. More than half, i.e. 54 percent, of construction representatives believe that the impact of the COVID-19 pandemic is business-neutral, and 41 percent indicate a negative impact of the pandemic. On the other hand, 36 percent of entrepreneurs believe that in the context of the pandemic, the situation of the industry will improve within the next 6 months. This is the second best result among the six sectors surveyed, right after the manufacturing sector.
The president of the board also emphasizes that the EFL Barometer, which looks into the future, does not clearly indicate a return to the former economic situation. Instead, it highlights the forecasts of the construction companies themselves, which are counting on maintaining a good situation in the second part of this year.
The study was prepared by Ecorys at the request of EFL. The survey is carried out on micro, small and medium-sized enterprises throughout Poland, and its results are published quarterly. A representative group of the survey consists of 600 respondents, and the current edition of the survey was held from June 18 to July 2, 2021.
The EFL barometer is a synthetic indicator, which aims to check the tendency of companies from the SME sector to growth, understood as setting new goals by enterprises related to the increase in sales, production, and expansion into new markets, which results in investments in fixed assets.