Building confidence remains static

Building confidence remains static


Confidence in the building industry remained at its highest level since 2008 in the fourth quarter with no change from the previous quarter.

The First National Bank (FNB)/Bureau for Economic Research (BER) building confidence index released yesterday revealed that confidence in the industry remained at 48 points on a 100-point scale in the fourth quarter after rising by 7 points in the third quarter.

The field work of the survey was conducted between October 14 and November 11.

Sizwe Nxedlana, the chief economist at FNB, said despite confidence remaining unchanged, the underlying data suggested that building activity picked up during the quarter.

Nxedlana said the current level indicated that there was an even split between those respondents satisfied with prevailing business conditions and those that were not.

'After slowing somewhat in the third quarter, the recovery in building activity accelerated nicely in the fourth quarter. This was led by increased activity in the non-residential sector, as well as work relating to smaller, informal projects.

'The outlook for the sector, however, remains uncertain. The moderation in the work done by architects and quantity surveyors suggests that the sharp acceleration in activity in the fourth quarter may slow in coming quarters,' he said.

The confidence of both architects (down 13 points) and quantity surveyors (down 11) fell by double-digit figures after a sustained improvement over the past few quarters.

'The fall in confidence of architects and quantity surveyors is substantiated by a general decline in the amount of work conducted, which highlights the fragile nature of the current recovery,' Nxedlana noted.

An improvement in confidence levels occurred among retailers of building materials (up 10 points), manufacturers of building materials (up 6), main contractors (up 4) and sub-contractors (up 4).

The confidence of building material retailers is now at 66, its highest level since 2008.

Nxedlana said the continued increase in sales and rising profits had buoyed the confidence of building material retailers.

'More importantly, however, this sustained improvement indicates that there is indeed activity taking place, albeit at the lower end of the market,' he said.

The confidence of building material wholesalers, which are not included in the composite index, also rose sharply during the fourth quarter.

The confidence of main contractors improved to 47 in the fourth quarter after declining by 2 points in the third quarter.

Nxedlana said this was mainly led by a spike in confidence in the non-residential sector, while the confidence of residential main contractors declined marginally.

'A similar pattern was observed in building activity, which increased significantly for non-residential contractors and only marginally for residential contractors during the quarter,' he said.

Nxedlana said despite a loosening in tendering competition and a modest revival in building activity, profitability had remained flat for most of the year.

The rise in building activity of main contractors and increased sales by building merchants helped support domestic sales and production by manufacturers of building materials, such as cement, bricks and glass.

Together with an increase in export sales, this resulted in the confidence of manufacturers of building material rising to 56 index points.

Business Report

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