The First National Bank (FNB)/Bureau for Economic Research (BER) Building Confidence Index has decreased from 36 in the second quarter of this year to 35 in the third quarter.

Not only was this the third consecutive decrease, but the reading of 35 means that 65% of respondents are dissatisfied with prevailing business conditions.

“The index has been moving within a narrow – albeit low – band since the middle of last year. This means that, while sentiment in the industry isn’t tanking, there is little lifting the business mood across the building value chain,” comments FNB senior economist Siphamandla Mkhwanazi.

Compared with the second quarter, business sentiment among main contractors improved by 11 points to 46 in the third quarter, largely as a result of an improvement in residential builder sentiment underpinned by better activity and overall profitability.

FNB and the BER add that, encouragingly, non-residential building activity also bounced back following a slight weakness in the second quarter.

Importantly, the rating of insufficient demand for new non-residential buildings, a proxy for order books, declined to its lowest level since the first quarter of 2023, the firms point out.

"Following a disappointing second quarter of 2025, building activity seems to have moved back to average levels in the third quarter. Moreover, it seems as if work in the non-residential building sector continues to emerge from its years-long slump,” Mkhwanazi says..

Meanwhile, sentiment among building subcontractors improved by four points to 37 in the third quarter, on the back of better activity and overall profitability, while sentiment among hardware retailers improved by one point to 36.

“The slowdown in hardware sales is not an unexpected outcome as many of the factors supporting consumer spending, such as low inflation and access to finance through pension reform, over the last few months are set to provide less of a boost in the second half of 2025,” says Mkhwanazi.

Sentiment among building materials manufacturers and quantity surveyors was, however, lower by seven and 12 points, respectively, quarter-on-quarter.

Building material manufacturer confidence remained the lowest of the sectors surveyed, at 18, and was down from an already downbeat 25 in the second quarter. Despite more restrained increases in production costs, a significant fall in production volumes depressed sentiment.

FNB and BER further point out that, while building activity improved in the third quarter, work earlier on in the building value chain (architects and quantity surveyors) slowed.

“The decline in work among quantity surveyors is not concerning as it simply returned to levels seen in the first quarter. In contrast, the sharp drop in architect activity was surprising.

"That said, it is too early to draw firm conclusions, as part of the decline reflects base effect – architect activity had already begun recovering last year. Also, at the current level, activity is in line with its long-term trend, Mkhwanazi says.

Looking ahead, he says, building activity may come under increased pressure given that both architect and quantity surveyor activity eased this quarter.

"However, the sharp improvement in non-residential builder order books suggests that the slow, but consistent, improvement in building work will most likely be maintained in coming quarters,” he adds.