Thursday, 31 March 2016 11:15

Civil confidence falls to a five year low

The first-quarter fall in civil confidence to its lowest level since 2011 reveals a weakening in South Africa’s construction activity that is expected to continue for the foreseeable future. This was indicated by the FNB/BER Civil Confidence Index last week.

Demand in the construction sector is one of the crucial indicators of economic growth as companies and the government tend to invest more on building and roads when the economy grows and less when it falls.

  • Confidence in the construction sector is at a four-year low as the benchmark industry index dropped 14 points reflecting the declining demand.

  • The index showed that more than 70% of respondents were dissatisfied with prevailing business conditions.
  • This is the lowest value since the end of 2011.
  • The number of respondents that rated insufficient demand for new construction work as a business constraint jumped to 85%‚ a four-year high.
  • According to the South African Reserve Bank‚ growth in the real value of construction works rose 4% year on year in the fourth quarter of last year from 3.7% in the third quarter.
  • Construction activity was largely supported by capital outlays by provinces and municipalities while capital expenditure by private enterprises‚ particularly in the mining sector‚ remained weak.