The latest First National Bank (FNB)/Bureau for Economic Research Civil Confidence Index remained unchanged at 43% in the second quarter of this year.

This index gauges the sentiment and economic health of South Africa’s civil engineering and construction sector.

FNB highlights that the outlook improved slightly, with fewer businesses saying they were struggling to secure new orders, pointing to a modest improvement in demand, and despite sharply weaker activity, overall profitability remained relatively high, which contributed to the improved sentiment.

However, the current reading also means that more than 55% of respondents were dissatisfied with prevailing business conditions.

Further, the index measuring activity growth deteriorated for the second consecutive quarter but remained above the long-run average.

FNB senior economist Siphamandla Mkhwanazi has noted that the survey showed strong growth activity in the second half of 2025 and, owing to respondents being asked to compare the current quarter with that of a year ago, base effects could also result in a weaker index reading.

“Based on the survey results, growth in construction works likely eased this quarter. This is in large part [owing] to the higher cost environment and the uptick in general economic uncertainty resulting from the US-Iran war.

“We should see work regain momentum if the current Middle East peace deal holds and normal trade flows resume. Demand from, among others, the energy, mining and transport infrastructure sectors, will persist,” Mkhwanazi explains.

He says information from Statistics South Africa reveals that the real value of construction works rose by 5.1% year-on-year in the first quarter, following a 0.2% year-on-year contraction in the fourth quarter of 2025.

Additionally, Mkhwanazi says the high cost environment has also resulted in much keener tendering price competition, however, sentiment remained supported by a relatively upbeat reading for overall profitability, unchanged from the previous quarter.

“On balance, the results were encouraging. The negative effect of rising input costs on work was expected, and activity should rebound once these cost pressures normalise, which is looking increasingly likely given the latest geopolitical developments,” he concludes.