First-quarter construction activity plummets
SA’s construction industry slumped in the first three months of 2020, with the Afrimat Construction Index showing that activity in the industry is now below that of the same period in 2011.
The index, compiled by economist Roelof Botha and released on Thursday, is a composite indicator of the level of activity in the building and construction sectors. The index fell 12% year on year, with employment the only sub indice to show an increase, of 0.3%. The biggest decline was in the value of new building plans passed, which fell 25.9%.
The index has fallen below 100 basis points for the first time, and uses the first quarter of 2011 as a basis for comparison.
The results were “terrible”, and largely do not include the effects of the Covid-19 shutdown, said Botha.
While the results of the index for the first quarter of 2020 are considerably down, hope for recovery for the construction sector lies in the government’s infrastructure-led economic growth recovery plan post-Covid-19, Botha said.
“The results of the index prove just how important the recovery plan is and, given the current low levels, we should see an immediate effect if activity is increased,” he said.
Constituent indicators within the index include salaries and wages in the construction sector, the value of buildings completed, sales of building materials, as well as passing of building plans.
The sector only contributes 3.3% to SA’s GDP, Afrimat said, but regardless has critical links to other sectors, and is crucial to the development of new infrastructure.