The First National Bank (FNB) quarterly report on the state of the civil construction industry in South Africa, released on Tuesday, indicated that 67% of respondents to a survey on the subject regarded business conditions as unsatisfactory.

FNB chief economist Cees Bruggemans said that the survey results “clearly” painted a picture of an industry under siege, “experiencing rather unfavourable business conditions at present”.

The civil industry obtained 88% of its work from the government sector.

With projects related to the 2010 FIFA World Cup drawing to a close and the rescoping of work available from some public corporations – such as Eskom, which had fallen behind with its capital expenditure programme owing to funding problems – construction activity was declining.

Also, management skills deficiency and other constraints at provincial and local government level were leading to under-spending on budgeted projects.

Bruggemans also observed that owing to the scarcity of new construction work, margins had come under pressure, which adversely affected the growth in the overall profitability of businesses that had participated in the survey.

Just under 70% of respondents then also reported lower profitability compared with the same quarter a year ago.

Bruggemans concluded that the business outlook for the third quarter of 2010 remained unfavourable, and that it was conceivable that business confidence in the sector could drop going forward.

He said that unless government projects took off soon, retrenchments in the civil construction industry were likely to increase.

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