Unexpected construction rebound buoys Q2 confidence
An unexpected rebound in construction activity has boosted confidence in the second quarter of 2016, with the First National Bank (FNB) and Bureau for Economic Research’s latest civil confidence index surging 13 points to a level of 41.
This had followed a first-quarter 14-point fall in civil confidence to its lowest level since 2011.
Although the upsurge of activity gave rise to higher confidence in the second quarter, the outlook for the year remained bleak, FNB senior industry analyst Jason Muscat said.
“While lower construction activity weighed on confidence in the first quarter of 2016, the opposite was true in the second quarter of 2016 as activity rebounded nicely,” he commented.
However, while the index had returned to similar levels registered in the fourth quarter of 2015, when a marginal improvement to 42 was recorded, it still indicated that close to 60% of respondents were dissatisfied with prevailing business conditions.
“Respondents expect somewhat of a slowdown in activity next quarter and the rating of insufficient demand as a business constraint – a proxy for the health of firms’ order books – remained high,” he pointed out.
Muscat commented that the quarter’s surge was likely the result of a combination of election-related capital spending and a rush to complete projects before the municipal financial year-end in June.
“This is unlikely to be sustained,” he concluded.
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