SA’s construction sector remains stuck in a low-confidence rut with only pockets of optimism emerging in the latest FNB/BER Building Confidence Index, released on Wednesday.
The index shed one point in the third quarter to register a level of 35, indicating that 65% of industry participants remain dissatisfied with prevailing business conditions.
This marks the third consecutive quarterly decline in the index.
The headline figure masks divergent trends within the building value chain. Main contractors saw a notable 11-point jump in sentiment, rising to 46, driven by stronger residential demand and profitability and an encouraging rebound in non-residential construction.
This was offset by a sharp 12-point decline in confidence among quantity surveyors and a 7-point drop among building material manufacturers.
Commenting on the data, FNB senior economist Siphamandla Mkhwanazi said: “Following a disappointing second quarter, 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.”
Indeed, indicators suggest the sector has found some footing after a tough first half of the year. Stats SA data showed a steep 10.8% annual drop in building investment in the second quarter, but survey responses point to a more modest decline in the latest quarter.
Still, early-stage indicators paint a mixed picture. Work volumes among architects and quantity surveyors, crucial precursors to future construction, slowed in the third quarter.
While the fall in quantity surveyor activity merely reversed previous gains, the downturn in architect activity was unexpected.
“That said, it is too early to draw firm conclusions, as part of the decline reflects base effects — architect activity had already begun recovering last year. Also, at the current level, activity is in line with its long-term trend,” Mkhwanazi said.
On the retail side, hardware retailers’ confidence increased to 36, from 35 in the second quarter. Hardware sales eased. The modest improvement reflects alignment between sales performance and outlook, after sentiment fell sharply in the previous quarter despite robust sales.
“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,” Mkhwanazi said.
Confidence among building subcontractors also improved, climbing to 37 from 33, supported by better activity and profitability.
However, building material manufacturers remained the most pessimistic cohort, with sentiment slipping to 18 — the lowest among all groups surveyed. Lower production volumes weighed heavily, despite relatively stable cost pressures.
“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,” Mkhwanazi said.
“Looking ahead, 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.”
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.