Uptick in Building Confidence Index

CONFIDENCE in the building sector recovered to 25 points in the second quarter, recovering from the two-decade low of 22 in the prior quarter.

The FNB/BER Building Confidence Index yesterday showed that overall sentiment rose, although there was a sharp decline among manufacturers of building materials. The index goes between zero – an indication of extreme lack of confidence – and 100, which indicates extreme positivity.

The index showed that the following respondents were satisfied with business conditions: architects, quantity surveyors, main contractors, sub-contractors, manufacturers of building materials, retailers of building materials and hardware.

However, manufacturers of building materials shed 35 points to register a level of 4 after gaining 17 index points in the previous quarter.

FNB senior economist Siphamandla

Mkhwanazi said the underlying indicators suggested a mild improvement in activity, but off a low base.

“While confidence is alarmingly low, it is not supported by the underlying indicators. In fact, sales increased noticeably along with a slight improvement in production,” Mkhwanazi said.

“It must also be mentioned that confidence in this sub-sector can be volatile from one quarter to another.”

Overall business confidence in South Africa is at a plateau after dipping to a 20-year low as the economy is experiencing muted growth.

FNB said the current levels of building confidence indicated that only one in four of the respondents in hardware retail, architecture, sub-contracting and main contracting registered higher confidence.

Main contractors bounced back to level 31 recorded in the second quarter due to an uptick in building activity, particularly in the residential sector, while hardware retailers rose to 30 index points, its highest level this year.