Insufficient demand for building and construction work remains a constraint for the industry and is unlikely to improve notably in the near term, the Construction Industry Development Board (cidb) says.
Its third-quarter SME Confidence Survey, released on Tuesday, shows that the domestic building and construction industry continues to struggle amid tough economic conditions.
“Sentiment remained in the doldrums as both general building and civil engineering contractors continued to experience a severe shortage of work. In fact, for some of the subsectors, activity was at its weakest level since the 2008/9 financial crisis,” comments cidb monitoring and evaluation project manager Ntando Skosana.
Building confidence remained largely unchanged in the third quarter, gaining one index point following the depressed reading of 30 in the previous quarter.
Skosana adds that “low confidence was underpinned by a further and deeper decline in activity. In addition to the current lack of demand, there is no sign within the survey data to suggest that activity will pick up in the near term.”
Regardless of the movements in confidence, activity growth remained under pressure across all the grades. This is especially the case for general building in Grades 5 and 6, which registered the worst activity reading since the survey was launched in the third quarter of 2008.
On a provincial level, confidence improved in Gauteng and KwaZulu-Natal.
“However, in contrast to the uptick in confidence in Gauteng, building activity slowed sharply. The activity indicator is now at its worst level on record,” Skosana points out.
The Western Cape also experienced a severe shortage of building work.
Civil engineering confidence was unchanged from the previous quarter at a historic low of 26 index points.
“Contributing to the downbeat sentiment was a slowdown in construction activity,” says Skosana.
Across the grades, the deterioration in sentiment was most pronounced among civil engineers in Grades 3 and 4 where business confidence fell to an all-time low of 16 index points.
Provincially, the Western Cape was the worst performer, with a drop in confidence to a new historic low of nine index points as a result of a sharp slowdown in construction activity.
“The activity indicator is now at its worst level on record,” says Skosana.