Increased costs slow growth in gross surplus
At the risk of stating what by now must be the very obvious, newly released final statistics show the construction industry performed strongly in 2012, driven by sustained expenditure on public works and private development projects.
According to a press release by the Census and Statistics Department issued Thursday, total receipts generated by construction reached HK$250 billion in 2012, up 13.5 percent on the figure recorded for 2011.
When compared to the HK$161.3 billion recorded in 2009, when the industry caught a cold after the 2008 financial crisis, the increase is 55 percent.
Since 2009 the government has increased spending on public works and public housing while getting the private developers to roll out more development projects.
Among the major public works currently being built are the five railway extension projects of railway operator MTR Corporation (0066) and major showcase projects such as the Hong Kong-Zhuhai-Macao Bridge and associated works.
All this construction work, naturally, has pushed up costs.
As an indication of rising labour costs, the compensation for employees in 2012 was HK$63.1 billion, up 24.6 percent over 2011 and up 57.8 percent over the 2009 figure.
However, part of the increase in employee costs would be accounted for the increase in numbers of people working in the industry, as contractors took on more staff to cope with the increased workload.
In 2012, the number of persons directly employed was 184,563 persons, representing an increase of 8.3 percent over 2011 and an increase of 36.5 percent over 2009.
Operating expenses, which includes items such as materials, utilities consumption, payments for subcontractor works and professional fees, totalled HK$173.6 billion, up 13.5 percent over 2011 and up 57.3 percent on 2009.
As to actually making money, it appears contractors, as usual, are not making that much more after doing all that construction work.
The gross surplus which is calculated by deducting intermediate consumption, interest payments and compensation to employees from gross output and adding back interest income was HK$13.3 billion, down 20.3 percent on 2011 and up only 21.8 percent on 2009.