The Afrimat Construction Index (ACI) increased only marginally, by 0.3%, year-on-year but decreased by 1.1% quarter-on-quarter in the fourth quarter of 2025, remaining at about 100.

The index was bolstered by a solid 5.4% increase in the volume of building materials produced and a 2.2% real increase in the value of building materials, on a year-on-year basis.

Although the activity levels in South Africa’s construction sector remain subdued, the ACI’s seasonally adjusted reading has increased for a second consecutive time – which is the first time this has occurred since the brief recession of 2020.

According to economist and ACI compiler Dr Roelof Botha, the most impressive aspect of the latest ACI data is the positive growth trend for the indicators that carry the largest weighting – sales values and volume of production of building materials.

Five out of the ACI’s ten indicators recorded positive year-on-year growth rates in the fourth quarter, while seven of the indicators recorded positive quarter-on-quarter growth.

On a year-on-year basis, employment in construction increased by 4.9% and retail trade sales (hardware) increased by 3.3%.

In turn, declines were recorded in the sales and wages segment of -1.5% year-on-year, in construction value added of -5.3% and building plans passed value of 5.7%. Whole trade sales for construction materials also decreased by 6.6% year-on-year in the fourth quarter.

Botha says the rate-cutting cycle of the monetary policy authorities in the country played a crucial role in lowering the cost of capital formation, which invariably involves construction works and building activity.

He hopes the current hostilities in the Middle East will not derail the shift to a more accommodating monetary policy stance, as further interest rate declines are necessary to lift the ACI from its current stable level to an expansionary trajectory.

Botha deems it encouraging that the value of construction works managed a quarter-on-quarter increase of 6.1% during the fourth quarter of last year, which is often a subdued quarter owing to the traditional winding-down of building activity in mid-December.

He also notes the exceptionally strong performance of private sector capital formation in buildings and construction works since interest rates were lowered from a 15-year high towards the end of 2024.

“After a period of lethargy caused by the deterioration of the country’s infrastructure and high interest rates, the private sector has started to invest substantially in capital formation, with an increase in the average quarterly value of these investments of 24% since the fourth quarter of 2024.”

According to Botha, public-private partnerships in infrastructure repair and expansion hold the promise of expanding economic activity within sectors that are labour-intensive and that affect ordinary citizens at the heart of their daily existence.

Looking ahead, he is hopeful that the R141-billion that the National Treasury has set aside for water resources and road infrastructure in the current fiscal year will result in the speedy implementation of new projects.

COMPANY VIEW

Afrimat CEO Andries van Heerden says that the group’s deliberate diversification strategy has once again proven successful. The group’s Construction Materials segment, particularly aggregates, is delivering strong results. This aligns with the findings of this ACI.

“Our strategic national footprint has ensured that we are well-positioned to supply products to Transnet as it maintains the rail corridors. Afrimat continues to supply products and aggregates for national, provincial, and rural road construction, as well as for public-sector maintenance and private-sector building projects.”

Van Heerden adds that the world is currently in a precarious situation, with the fluctuations in oil prices and supply to have far-reaching effects.

“It remains my hope that government will focus not only on critical infrastructure maintenance but also on ensuring that the country has resilient infrastructure capable of supporting economic growth, job opportunities and the wellbeing of South Africans.

“We are a tenacious nation, with large and small entrepreneurs prepared to engage in public-private partnerships that, in my opinion, can push the country forward in a meaningful way.”