Building confidence up in Q3 despite slowdown in activity
Building confidence increased during the third quarter of the year from 41 to 48 index points, to reach its highest level in five years, despite a slowdown in activity with regard to main contractors and subcontractors, the latest First National Bank (FNB)/Bureau for Economic Research (BER) building confidence index has shown.
The index indicated that there was an even split between those respondents that were satisfied with prevailing business conditions and those that were not.
Main contractors’ confidence levels declined slightly during the third quarter to 43 index points, after it had jumped by 15 points to 45 during the second quarter, as third-quarter growth in building activity slowed down considerably compared with that of the second quarter.
“This does not mean that the building recovery has stalled. The underlying trend is up. However, it seems that growth was more subdued in the third quarter, following a relatively good second quarter,” FNB chief economist Sizwe Nxedlana said.
The slowdown in building activity was more pronounced in the nonresidential sector, with the residential sector outperforming the nonresidential sector during the quarter.
Similarly, activity in the subcontractor segment also eased, which resulted in a decline in confidence among these contractors, from 41 index points in the second quarter, to 39 points in the third quarter.
However, although main contractor, and to a lesser extent subcontractor, activity had slowed down during the quarter, smaller, informal projects continued to support the sector, which was reflected in the confidence among building retailers that increased from 46 to 56 points in the third quarter.
“The rebound in confidence was largely owing to a marked uptick in sales and profitability,” the FNB/BER index stated.
Meanwhile, an improvement in the retail segment filtered through to building materials manufacturers, with a rise in domestic sales and domestic sales orders contributing to a sharp increase in confidence from 27 index points in the second quarter to 56 points in the third quarter.
“The continued demand from retailers and the anticipation of a more sustained recovery in the building sector seems to have boosted the confidence of building material manufacturers,” Nxedlana said.
Further, confidence of quantity surveyors and architects also improved to 50 and 46 index points respectively.
However, the FNB/BER index stated that, in terms of activity, the picture was mixed, as work by quantity surveyors increased, while that of architects slipped back to first-quarter levels.
“Looking ahead, the building pipeline remains supportive of further growth. However, the recovery in building activity is likely to be modest, given the headwinds confronting the sector in the form of lacklustre economic growth, slower growth in consumer spending and, more recently, labour unrest,” FNB said.
Comments
Press Office
Announcements
What's On
Subscribe to improve your user experience...
Option 1 (equivalent of R125 a month):
Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format
Option 2 (equivalent of R375 a month):
All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors
including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.
Already a subscriber?
Forgotten your password?
Receive weekly copy of Creamer Media's Engineering News & Mining Weekly magazine (print copy for those in South Africa and e-magazine for those outside of South Africa)
➕
Recieve daily email newsletters
➕
Access to full search results
➕
Access archive of magazine back copies
➕
Access to Projects in Progress
➕
Access to ONE Research Report of your choice in PDF format
RESEARCH CHANNEL AFRICA
R4500 (equivalent of R375 a month)
SUBSCRIBEAll benefits from Option 1
➕
Access to Creamer Media's Research Channel Africa for ALL Research Reports on various industrial and mining sectors, in PDF format, including on:
Electricity
➕
Water
➕
Energy Transition
➕
Hydrogen
➕
Roads, Rail and Ports
➕
Coal
➕
Gold
➕
Platinum
➕
Battery Metals
➕
etc.
Receive all benefits from Option 1 or Option 2 delivered to numerous people at your company
➕
Multiple User names and Passwords for simultaneous log-ins
➕
Intranet integration access to all in your organisation