The FNB/BER Civil Confidence Index finds lower sentiment despite some improvement and profitability in the sector. Picture: John Woodroof.
Sentiment among civil contractors weakened in the fourth quarter of 2021 as the vast majority of businesses were dissatisfied with prevailing conditions.
The FNB/BER Civil Confidence Index released yesterdayslipped from 17 index points to 15 index points in the fourth quarter, a far cry from the 50 index points that separates expansion from contraction.
FNB said sentiment among businesses deteriorated even with an improvement in activity and profitability.
FNB senior economist Siphamandla Mkhwanazi said while the low level of civil contractor confidence was justified, the further decline was at odds with some improvement in underlying activity.
Mkhwanazi said it was difficult to pinpoint the reasons behind the persistently weak level of confidence.
“One possible qualification is that, even though the growth in activity is somewhat better this quarter, compared to a few years ago, the total value of construction activity is still much lower,” Mkhwanazi said.
According to Statistics South Africa, the construction industry shed at least 65 000 jobs in the three months to September.
Looking ahead, FNB said there were signs that activity could improve further, albeit only slightly.
Mkhwanazi said respondents noted that there was indeed an improvement in tender activity. However, Mkhwanazi said tender awards were lagging significantly, and the validity of tenders was increasingly being extended.
He said this meant that, while there was interest, not all projects would be realised, or at best, be commissioned in good time.
“The still low level of activity – in absolute terms – and delays in the awarding of tenders could have kept a damper on the business mood,” Mkhwanazi said.
“An acceleration in the rollout of infrastructure projects by the state and further progress on structural and regulatory reform to boost private sector infrastructure spend would go a long way to alleviate the woes in this sector.” -
siphelele.dludla@inl.co.za
BUSINESS REPORT ONLINE
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