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Africa|Business|Civils|Construction|Energy|Environment|Infrastructure|Road|Water|Infrastructure
Africa|Business|Civils|Construction|Energy|Environment|Infrastructure|Road|Water|Infrastructure
africa|business|civils|construction|energy|environment|infrastructure|road|water|infrastructure

Civil Confidence Index boosted by improved activity

29th March 2023

By: Irma Venter

Creamer Media Senior Deputy Editor

     

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The First National Bank (FNB)/Bureau for Economic Research (BER) Civil Confidence Index has increased to a more than six-year high of 42 in the first quarter of the year, up from 31 in the fourth quarter of last year.

Business confidence was boosted by better activity in the civils sector.

Sentiment has now improved for four consecutive quarters.

The current level of the index means that slightly less than 60% of respondents were dissatisfied with prevailing business conditions.

There were already signs of a less constrained environment towards the end of last year.

Statistics South Africa reported a 1.2% yearly decline in the real value of construction works in the fourth quarter last year, from a yearly contraction of 3.1% in the third quarter.

“The survey results point to a further improvement, possibly an annual expansion in construction works during the first quarter of 2023,” says FNB senior economist Siphamandla Mkhwanazi.

“Importantly, however, is that this comes off an extremely low base.”

The higher activity also boosted overall profitability. 

“Civil contractors have experienced significant profit margin pressure over the past few years. This seems to have eased somewhat [in the first] quarter, adding to the more upbeat mood,” notes Mkhwanazi.

Looking ahead, the availability of work is predicted to continue trending higher. 

In addition to respondents’ own upbeat expectations for activity next quarter, the rating of insufficient demand for new work as a business constraint – a proxy for order books – fell to its lowest level since 2014. 

“Anecdotally, there does seem to be an increase in tendering activity in the public sector related to water and road infrastructure in particular,” says Mkhwanazi.

“Assuming these tenders are awarded, it will greatly boost construction work over the next few quarters. In the private sector, investment in alternate energy sources is buoyant.”

The FNB/BER civil confidence index can vary between a maximum of 100 (which indicates that all respondents were satisfied with prevailing business conditions) and a minimum of zero (indicating that all respondents were dissatisfied). 

A level of 50 indicates that the respondents are equally divided between those satisfied and dissatisfied.

The fieldwork for the first quarter survey was conducted between February 8 and 27, 2023.

 

Edited by Creamer Media Reporter

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