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NEWS: Mixed bag for construction in South Africa

The latest FNB/BER Civil Confidence Index paints a mixed picture for construction in South Africa.


The index dropped by two points from 43 points in 3Q2023 to 41 in 4Q2023, meaning that nearly 60% of those in the civil engineering industry are dissatisfied with the prevailing business conditions.

Despite the overall decline, sub-indices are far more positive, with growth in activity continuing to gain momentum, resulting in better-than-average overall profitability.

“Activity in the civil construction sector has been on an upward trajectory for the past few quarters. However, according to Statistics SA it fell back somewhat in 3Q2023, contracting in real terms by 0.9% year-on-year,” Siphamandla Mkhwanazi, Senior Economist at FNB, said.

“That said, the survey results suggest that construction activity likely rebounded in 4Q2023.”
FNB/BER Civil Confidence Index
Looking ahead, respondents said that they expect an improvement in order books in the next quarter.This and a decline in the index measuring the keenness of tendering price competition to its lowest level since 2013 suggest that the growth momentum will be maintained, even if it’s just over the short term.

“The survey results reveal a sector in which demand is currently relatively abundant and the pipeline of work robust. However, respondents remain concerned about the prevalence of criminal activity in the sector as well as the uncertainty created by the cancellation of tenders and delays in tender adjudication, which may have weighed on the overall business mood,” said Mkhwanazi.

“The underlying data related to activity, profitability and tender competition are much more positive than what sentiment suggests. In fact, the sector seems to be experiencing a period of sustained activity growth.”

“One can therefore conclude that confidence is being negatively affected by factors not directly related to current demand, along with broader pessimism from other parts of the economy relating to load-shedding, logistical constraints and the fiscus, among others.”

The source for this hardhatNEWS is Business Tech

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