Construction World July 2021

COMMENT

The Afrimat Construction Index (ACI) for the first quarter of 2021 shows a marginal decline after the rapid recovery of the construction sector in the third and fourth quarters of 2020. The ACI is a composite index of the level of activity in the building and construction sectors and is compiled by the economist Dr. Roelof Botha on behalf of Afrimat.

I t is a seasonal trend for the ACI to decline in the first quarter of the year. Albeit a decline, Botha says the consolidation of the recovery trend is evident in the increase of the four-quarter average. For him it is encouraging that the ACI has now remained above the base period level of 100 for three successive quarters. This follows the rapid decline in the second and third quarters of 2020 – a result of the COVID-19 pandemic. Even with the re-introduction of some more stringent lockdown regulations in January and February, the ACI indicates that the industry had a satisfactory performance during the first quarter of the year. It recorded an increase of 5,4% on a year-on-year basis. In essence, when compared in this way, Botha says the increase effectively eliminates the effect of the pandemic on the construction sector. A dramatic roll-out of COVID-19 vaccinations and a decline in the current third wave of infections will see this upward trend continuing for the sector’s further recovery. There was a substantial degree of variance in the indicators of which the ACI is a composite. It recorded an index value of 109 in the first quarter, but only three of the nine indicators that it is informed with, recorded an increase

over the preceding quarter. Between January and March of the year, the ACI declined by 5,6%, almost the same as the increase by the construction sector quarter-on-quarter. “When compared to the first quarter of 2020, the ACI outperformed construction sector value add by a considerable margin,” says Botha. The recovery in most of the sectors in the country has been V-shaped – a result of the lifting of most of the lockdown regulations. The effect of the pandemic will, however, linger for much of 2021. There has been a significant recovery in the number of building plans passed by larger municipalities while the rand/dollar exchange rate has increased significantly since the beginning of April 2020. In addition, the decline of mortgage financing and the progress that has been made with the implementation of government’s recovery and reconstruction plan have contributed to the recovery of the construction

industry. . Stay safe Wilhelm du Plessis Editor

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2 CONSTRUCTION WORLD JULY 2021