Dynamics of construction and assembly production in May 2020

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Today (23 June) at 10.00 a.m., the Central Statistical Office (GUS) published the results of construction and assembly production in May 2020. These statistics, although slightly worse than expected, we still have a moderately positive opinion. The decrease by about 5% is not a bad result compared to other branches of the economy.

This time the scale of the decline in individual segments of the construction market was comparable (it oscillated around 5%), in the long run, the high strength of the engineering segment is still confirmed, which is now a kind of stabilizer in the construction industry. After five months of the year, the engineering segment is growing by 7.6% y/y.

In our opinion, the period of panic over uncertainty about the impact of the situation on the market is probably behind us, as evidenced by the rebound of moods in construction companies (improvement of economic conditions in the Central Statistical Office survey).

The construction industry is still relatively resistant to the effects of the epidemic, with the vast majority of investments going on at their pace. However, there are already signs of a negative impact of the deterioration of investment sentiment. In May, the number of new residential construction starts fell sharply once again (-27%), which is a warning signal to those who believe that construction will remain almost unaffected by the negative impact of COVID-19. It is expected that in the second half of the year, the lower number of new residential construction starts, especially in the market segments most affected by COVID-19, will result in weaker sales results in construction companies implementing cubature projects.

The rewards for the expected decline in private investment will be a continuation of the increased scale of infrastructural programs for the construction industry – in recent days, the pool of funds earmarked for the implementation of the National Roads Construction Programme (PBDK) for 2014-2023 (with an outlook to 2025) has been increased by PLN 21bn.

Szymon Jungiewicz
Construction Business Unit Director