Civil construction confidence slows in Q4
Confidence in the civil construction sector fell six index points during the fourth quarter of 2012 on the back of low levels of profitability and increased competition, the latest First National Bank (FNB) and the Bureau of Economic Research (BER) State of the Civil Construction Industry survey revealed.
FNB consulting economist Cees Bruggemans said confidence fell to 36 points in the period under review, compared with the prior quarter’s four-year high of 42 points, indicating that six out of ten respondents were “dissatisfied with prevailing business conditions” during the fourth quarter of 2012.
A mild slowdown in construction activity, increased margin pressure, “fragile” demand for new construction work, fiercer tendering price competition and weak overall profitability weakened civil construction confidence.
However, he noted that, despite the weaker confidence, activity in the industry remained higher than at the start of 2012. The index rose to 34 during the first quarter of the year, from 26 and 21 in the last and third quarters of 2011 respectively.
Government’s provincial capital expenditure rose 12.5% year-on-year during the third quarter, despite “below par” spending by municipalities, while construction work by State-owned enterprises, such as Eskom, Transnet and the South African National Roads Agency Limited, continued.
“The private sector probably underperformed to an even greater extent owing to the unstable conditions in the mining sector,” he commented.
Bruggemans said the first-quarter 2013 outlook was more positive, as activity and profitability rose, albeit at a slow pace.
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