Drop in con­fi­dence in build­ing in­dus­try, BER sur­vey shows

The Star Early Edition - - BUSINESS REPORT - Roy Cokayne

CON­FI­DENCE in the build­ing in­dus­try slumped sharply in the sec­ond quar­ter of this year, with al­most 70 per­cent of re­spon­dents to the FNB-Bu­reau for Eco­nomic Re­search (BER) build­ing con­fi­dence in­dex sur­vey in­di­cat­ing they were dis­sat­is­fied with pre­vail­ing busi­ness con­di­tions.

FNB-BER re­vealed yes­ter­day the in­dex dropped 11 in­dex points on a 100-point scale to 32 in the sec­ond quar­ter from 43 in­dex points in the pre­vi­ous quar­ter, which was the high­est in­dex level in more than a year.

All sub-sec­tors mea­sured reg­is­tered a drop in con­fi­dence.

John Loos, a prop­erty econ­o­mist at FNB, said this had only hap­pened five times pre­vi­ously since the in­dex was first com­piled in 1997.

“The broad-based na­ture of the de­cline in con­fi­dence sug­gest the sec­tor is fac­ing in­creas­ing pres­sure from a num­ber of fronts. The re­sults (in the sub-sec­tors) are rea­son­ably con­sis­tent in that they point to­wards a fur­ther con­trac­tion in the build­ing sec­tor in the sec­ond quar­ter,” he said.

The sur­vey re­sults cover six sec­tors and re­flect the per­cent­age of ar­chi­tects, quan­tity sur­vey­ors, main con­trac­tors, sub-con­trac­tors, man­u­fac­tur­ers of build­ing ma­te­ri­als and retailers of ma­te­rial and hard­ware who were sat­is­fied with pre­vail­ing busi­ness con­di­tions.

Afrimat, the listed open-pit min­ing group and in­dus­trial min­er­als and con­struc­tion ma­te­ri­als sup­plier, yes­ter­day also re­leased its con­struc­tion in­dex, which re­vealed that con­fi­dence de­clined to 122.7 in the first quar­ter of this year from an eight-quar­ter high of 127 in the fourth quar­ter of last year.

This in­dex is com­piled by econ­o­mist Roelof Botha for Afrimat and is a com­pos­ite in­dex of the level of ac­tiv­ity in the build­ing and con­struc­tion sec­tors.

Botha said yes­ter­day that de­spite the de­cline in the in­dex, the con­struc­tion sec­tor at large re­mained on a stronger foot­ing than seven years ago, with the in­dex hav­ing ex­panded by 22.7 per­cent since the third quar­ter of 2010.

This was was more than dou­ble the rate of growth of the econ­omy as a whole, he said.

Botha added that the com­pos­ite in­dex pro­vided a bal­anced and re­al­is­tic view of the level of ac­tiv­ity in the con­struc­tion sec­tor be­cause it evened out the contradictory trends of con­di­tions por­trayed by the in­di­vid­ual com­po­nents that made up the in­dex.

How­ever, Botha said con­fi­dence lev­els, as re­flected by the in­dex, were likely to re­main un­der pres­sure dur­ing the sec­ond quar­ter be­cause of the de­clin­ing trend in over­all busi­ness con­fi­dence, so­cio-po­lit­i­cal un­rest and the de­lay by the SA Re­serve Bank in adopt­ing a more ac­com­mo­dat­ing ap­proach to­wards mon­e­tary pol­icy.

The steep­est de­cline in the FNB-BER in­dex was re­ported by hard­ware retailers, whose con­fi­dence lev­els dropped by 24 in­dex points to 13, the joint low­est level since the sec­ond quar­ter of 2012.

Loos said the woes in the hard­ware sec­tor was con­sis­tent with the broader re­tail en­vi­ron­ment, which was suf­fer­ing be­cause of con­strained con­sumer spend­ing.

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