This comes on the back of the struggling construction industry bucking the trend and growing by 0.5% in the fourth quarter of 2022 while gross domestic product (GDP) shrank by 1.3%.
The FNB/BER Civil Confidence Index (CCI) gained 11 points to register a level of 42 in the first quarter, from 31 in the fourth quarter of 2022, improving for four consecutive quarters.
FNB said yesterday that the higher sentiment was due to a broad-based improvement in the business environment this quarter, which was encouraging.
The indices measuring growth in civil construction activity, employment and profitability were at multi-year highs.
FNB senior economist Siphamandla Mkhwanazi said business confidence increased on the back of better activity following signs of a less constrained environment towards the end of 2022.
“The results strongly suggest that construction work is likely to gather further momentum over the short term," Mkhwanazi said.
"However, it is uncertain if this will materialise to the extent expected, given broader economic weakness and the public sector’s poor track record of delivering on infrastructure projects."
The CCI, sponsored by FNB and compiled by the Bureau for Economic Research (BER), was conducted between February 8 and 27.
FNB said the current level of the index meant that slightly less than 60% of respondents were dissatisfied with prevailing business conditions.
Mkhwanazi also said the higher activity also boosted overall profitability in the sector.
“The survey results point to a further improvement, possibly an annual expansion in construction works during the first quarter of 2023,” Mkhwanazi said. “Importantly, however, this comes off an extremely low base.
“Civil contractors have experienced significant profit margin pressure over the past few years. This seems to have eased somewhat this quarter, adding to the more upbeat mood.”
Looking ahead, FNB said the availability of work was predicted to continue trending higher.
In addition to respondents’ own upbeat expectations for activity next quarter, the rating of insufficient demand for new work as a business constraint – a proxy for order books – fell to its lowest level since 2014.
According to Mkhwanazi, anecdotally, there does seem to be an increase in tendering activity in the public sector related to water and road infrastructure in particular.
“Assuming these tenders are awarded, it will greatly boost construction work over the next few quarters. In the private sector, investment in alternate energy sources is buoyant,” he said.
However, Gap Infrastructure Corporation CEO Roelof van den Berg warned that persistently high load shedding was extracting a heavy price from the construction industry, severely constraining its economic growth and job creation potential.
The construction industry continued to shed jobs in the fourth quarter of 2022, with 16 000 jobs lost during the period and skewing that total employment in the formal non-agricultural sector increased by 48 000 during the period.
Van den Berg said the ongoing energy crisis was driving up costs significantly while hampering the smooth roll-out of construction and infrastructure projects, preventing the industry from reaching its full potential as an economic contributor.
“This said, by resolving the country’s power constraints, we could easily see the industry double in size and create hundreds or even thousands of new jobs,” Van den Berg said.
“In fact, the industry could quickly employ more than one in every 10 people in the country, especially given its capacity to employ low- and semi-skilled workers.
“The instability and unreliability of power caused by load shedding has decreased investor confidence and hindered businesses throughout value chains, including suppliers, subcontractors and manufacturers, who all provide crucial inputs into the industry.”
The source for this hardhatNEWS article is IOL 
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