The latest Afrimat Construction Index (ACI) shows a marginal year-on-year increase of 0.3%.

The first-quarter index was boosted by year-on-year increases of more than 5% in the value of both construction works and buildings completed, with employment and sales of building materials also improving.

The ACI is a composite index of activity levels in the building and construction sectors, and is compiled by economist Dr Roelof Botha on behalf of mining and materials group Afrimat.

The index value is expressed in real terms – in other words, after adjusting for the effect of inflation.

Botha notes that although activity levels in South Africa’s construction sector remain subdued, the ACI’s seasonally adjusted reading has increased for the third consecutive quarter – the first time this has occurred since the brief recession of 2020.

“The most impressive aspect of the latest ACI reading is the stability that has crept in for two key indicators – the value of non-residential buildings completed, and the value of construction works.”

Botha says it is also encouraging that employment levels in the construction sector have outperformed job creation in most other sectors, with 74 000 more jobs recorded in the first quarter of 2026 than a year ago.

“Despite the combined value of construction works and buildings only accounting for 5.5% of total value added in the economy, the construction sector was responsible for 11% of the new jobs created in the first quarter of 2026 year-on-year.”

As was the case in the previous quarter, five of the ACI’s ten indicators recorded positive year-on-year growth rates, while one remained unchanged, and three of the other four recorded declines of less than 2% year-on-year.

“Lower interest rates have played an important role in lowering the cost of capital formation,” believes Botha.

He adds that it is encouraging that total construction tender activity during February and March experienced two consecutive months of double-digit increases.

According to a report published by Industry Insights, overall construction tender activity in South Africa increased by 11.4% year-on-year in the first four months of this year.

KwaZulu-Natal, the Eastern Cape, and the North West have shown notable increases thus far this year.

Botha notes that the macroeconomy also received a welcome boost in the first quarter of the year in the form of a 1.4% year-on-year increase in GDP, with investor sentiment improving as a result of a strong currency and upgrades by international ratings agencies on the outlook of South Africa’s sovereign debt.

Looking ahead, Botha is hopeful that the reopening of the Strait of Hormuz in the Middle East will lead to lower inflation and a resumption of the Reserve Bank’s rate-cutting cycle.

“A lowering of the prime rate will go a long way to restoring profitability in the construction sector, which is sensitive to the cost of capital, especially in residential construction.”