FNB/BER Civil Confidence Index rises, but sentiment still depressed
Sentiment in the civil construction sector, as measured by the First National Bank (FNB)/Bureau for Economic Research (BER) Civil Confidence Index, increased to a still-low level of 11 in the third quarter, from an all-time low of five in the second quarter.
Despite having increased by six points, confidence remained low owing to continued weak demand, which is expected to persist over the short term.
Underpinning the low confidence was continued pressure on activity, which, while improved compared with the previous quarter, is likely well below the level recorded year-on-year.
The current index level means the majority (almost 90%) of respondents are dissatisfied with prevailing business conditions.
Despite lockdown restriction easing so that construction firms could operate more normally, activity levels remained "ultra-depressed" with only a marginal improvement from the previous quarter, the BER noted in a statement.
According to Statistics South Africa, the real value of construction works reduced by 30.9% year-on-year in the quarter, after a more muted contraction of 1.9% year-on-year in the first quarter.
Downbeat prospects for work over the next few quarters also kept confidence low.
In the period, a slightly higher percentage of respondents – than the already elevated level in the second quarter – stated that the demand for new work, a proxy for company order books, was insufficient given normal business requirements.
Moreover, tendering competition intensified.
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