Construction sector remains downbeat about lack of large-scale projects
The First National Bank (FNB)/Bureau for Economic Research Civil Confidence Index (CCI) decreased to 41 in the second quarter of the year, from 45 in the first quarter.
FNB senior economist Siphamandla Mkhwanazi says sentiment was lower even though construction activity and overall profitability improved in the sector and that the outlook remains relatively downbeat.
The current reading means that almost 60% of respondents to the CCI survey are dissatisfied with prevailing business conditions.
Uncertainty regarding future work seemed to weigh on confidence this quarter, especially given the relatively good outcomes for activity and overall profitability.
There are signs that work may come under strain in future. The rating of insufficient demand as a business constraint (a proxy for order books) rose and respondents’ expectations for activity next quarter were relatively downbeat compared with the actual outcomes this quarter.
“The comments from respondents highlight some of their concerns regarding activity going forward, such as the lack of published tenders, persistent delays in adjudication and, concerningly, a lack of large infrastructure projects in particular,” Mkhwanazi explains.
He adds that there is a broad sense in the construction industry that large State-led infrastructure projects, in particular, are not as forthcoming as previously hoped, despite many dialogues, conferences and speeches on infrastructure and its importance to growth and development.
“We have yet to see this [sentiment] reflected in the form of sustainable construction activity,” Mkhwanazi concludes.
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