As the construction industry recession continues for an extended period, the number of companies registered in the comprehensive construction industry for the first quarter this year has reached the lowest level in history.
According to the construction industry knowledge information system (KISCON), 131 companies announced registration in the comprehensive construction industry for the first quarter (January to March) on the 6th, including changes, corrections, and withdrawals.
This is the lowest since information has been published on the construction industry knowledge information system since 2004, based on the first quarter. Compared to the previous quarter, it decreased by 2.3%, and compared to the same period last year, it decreased by 6.3%.
In contrast, the number of business closures in the construction industry (including some closures and changes in business sectors) reached 160 in the first quarter, the largest since 2011 (164 cases). This reflects a 19.4% increase compared to the same period last year.
With soaring construction costs and a real estate slump, coupled with external variables such as the presidential impeachment and elections, it has been analyzed that the number of people starting anew in the construction industry has decreased while the number of construction companies going out of business due to management difficulties has increased.
Major construction indicators have also worsened this year. According to the Korea Construction Industry Institute, construction orders totaled 21.7 trillion won in January and February, a decrease of 14.9% compared to the same period last year.
In particular, public sector orders dropped by 26.9%, surpassing the decrease in the private sector (-9.0%). The latest tally for February shows public orders at 2.9 trillion won, down 28.3% compared to the same period last year. This is the lowest for February since 2019 (2.8 trillion won).
Private orders amounted to 8.4 trillion won, marking a 0.6% increase. The decrease in orders is analyzed to be influenced by the nearly 1 trillion won reduction in this year's social overhead capital (SOC) budget, resulting in a sharp drop in public sector contracts, as well as an atmosphere of reluctance toward securing orders due to political instability and the real estate downturn.
The difficulties faced by the construction industry are evident in the fact that mid-sized construction companies and local representative construction companies, which rank around the top 100 in construction capability evaluations, have been filing for court rehabilitation one after another this year. From Shin Dong-A Construction in January to Daehung Construction, the top company in the Chungbuk region, which filed for rehabilitation on the 18th of last month, at least 10 construction companies that are known to have filed for rehabilitation this year, averaging more than 2 per month.
The chill in the construction industry is also being transmitted directly to the job market. According to Statistics Korea, the number of employed in the construction industry in March decreased by 185,000 (-8.7%) compared to the same month last year, marking the 11th consecutive month of decline. The magnitude of the decline is the largest since statistics on this topic have been compiled since 2013.