Construction World October 2021

COMMENT

The Civil Confidence Index in South Africa, as compiled by First National Bank (FNB) and the Bureau for Economic Research, increased to 17 points in the third quarter. This means that 80% of respondents are unhappy with the current conditions. The Bureau of Economic Research Building Confidence Index declined by 4 points (from 39 to 35) for the same period. This means that some 65% of respondents are dissatisfied with the prevailing business conditions.

D espite the increase in the Civil Confidence Index, some of the underlying indicators worsened as many industry respondents are unhappy with the business conditions. The major concern is lack of newwork – this influences concerns of profitability. As the civil sector relies on the public sector, there is little to be happy about. Something such as the amendments to Schedule 2 of the Energy Regulation Act, which is a step towards developing renewable energy projects through the IPP (independent power producer) programme, will only provide contractual value once it materialises. This index has been hovering at about the 20-point mark since the middle of 2017. It is a far way from 50 points that will indicate that respondents are neither happy nor dissatisfied. Building confidence declines Despite the fact that the composite index remains higher than the average of the past few years, the index that measures the confidence in the core building sector (and excludes the hardware retail

and building material manufacturing sector), fell to 20 from 25 in the second quarter. FNB’s economists stated that the confidence in the core building sector has, since the start of the year, been noticeably lower than the overall composite index, “highlighting the persistent weakness in the larger-by-value brick and mortar segments.” Main contractor confidence slid from 22 to 18 (Q2 vs Q3) and subcontractors' confidence declined from 28 to 21 (Q2 vs Q2). As in the Civil Confidence Index, the overall profitability within Building Confidence is under pressure. As activity and profitability go hand- in-hand, FNB says that the extent to which the profitability index declined has far exceeded that of activity. The building pipeline also declined – this resulted in the confidence of architects declining from 23 to 18 while that of quantity surveyors shrank from

26 to 21. Stay safe Wilhelm du Plessis Editor

EDITOR & DEPUTY PUBLISHER Wilhelm du Plessis constr@crown.co.za ADVERTISING MANAGER Erna Oosthuizen ernao@crown.co.za LAYOUT & GRAPHIC ARTIST

PUBLISHER Karen Grant

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2 CONSTRUCTION WORLD OCTOBER 2021