Following a decline to 48 in the fourth quarter of 2024, the FNB/BER Civil Confidence Index fell by a further three points to 45 in the first quarter of 2025.

The index can vary between a maximum of 100, which indicates that all respondents were satisfied with prevailing business conditions, and a minimum of zero, indicating that all respondents were dissatisfied. The fieldwork for the first quarter survey was conducted between February 5 and 24.

The current reading means that 55% of respondents are dissatisfied with prevailing business conditions.

The index reveals that the lower sentiment was underpinned by weaker overall profitability and a worsening in the rating of current business conditions.

Activity, however, was somewhat better. Data from Statistics South Africa (Stats SA) showed that the real value of construction works contracted by 3.4% year-on-year in the fourth quarter of 2024, from a 3.6% year-on-year decline in the third quarter of 2024.

The index indicates that further improvement in spending on construction works is likely next quarter.

“For a while now, surveys have suggested that activity in the civil construction industry is very slowly, but surely, gaining momentum. However, this is probably inadequate to address South Africa’s pressing infrastructure needs,” FNB senior economist Siphamandla Mkhwanazi says.

The index showed that measured constraints to business operations were broadly lower this quarter than at the end of 2024. The rating of insufficient new demand as a business constraint – a proxy for order books – was only somewhat better and supports the overall view that work is set for a protracted improvement, at best.

Of note is that the rating on the availability of construction material fell to its lowest level since before the Covid-19 pandemic.

“With the closure of ArcelorMittal South Africa’s [longs business] now confirmed for the second quarter, and if negotiations to keep it open fail, it is highly likely that shortages of construction material will soon be a key concern to contractors again,” Mkhwanazi notes.

Weaker overall profitability and business conditions largely account for the deterioration in sentiment. Activity, however, improved, while the rating of the lack of new demand as a constraint was moderately lower.

“Growth in activity is, compared to the longer-term average, not faring too poorly. However, the amount of work currently under way is not enough to address South Africa’s deep infrastructure backlog while order books are consistent with only a lukewarm improvement going forward,” Mkhwanazi says.