Survey shows market confidence flat among general builders, civil contractors
General building confidence, as measured by the Construction Industry Development Board (CIDB) SME Business Conditions Survey, was flat at 36 index points in the first quarter of this year.Only Grades 3 and 4 reported lower confidence in line with weaker underlying indicators among general builders in this group.For Grades 5 and 6, as well as Grades 7 and 8, the improvement in the momentum of activity growth helped nudge confidence higher.“It should be noted that, even though one sees positive movements in some of the underlying indicators across the grades, confidence levels remain at depressed levels – below long-term averages,” CIDB monitoring and evaluation project manager Ntando Skosana said in a statement released on Wednesday.Among the big four provinces, building contractor confidence in the Western Cape remained above the 50-point neutral mark. Confidence decreased by three index points to 54 for the quarter.Although sentiment improved for builders in the Eastern Cape, Gauteng and KwaZulu-Natal, confidence levels registered an average of 30 points.
“At this level of confidence, a disappointingly high majority of about 70% of respondents were dissatisfied with current business conditions during the quarter; however, this should not come as a surprise, especially when one looks at the underlying indicators," Skosana said.
Civil engineering confidence also came in at 36 index points during the first quarter of this year.Both activity and profitability were lifted off the exceptionally low levels seen in the fourth quarter of last year.
“These indicators still came in below their long-term averages, however, which explains why confidence remains low.”From a grades perspective, Grade 5 and 6 civil contractor confidence was mostly flat against the backdrop of better activity, while pressure on profitability persisted.The uptick in confidence among Grade 3 and 4 respondents was slight, and was barely supported by underlying indicators. The increase in confidence for Grade 7 and 8 was notable, from 24 points to 30. This came on the back of improved activity and profitability.“The first quarter of 2018 was yet another period where strain in both the building and civil engineering sectors was highlighted. The outcome in confidence levels in both sectors was below 40 index points, which was broadly in line with the poor levels of the underlying indicators,” she said.
Skosana noted that, discouragingly, future activity momentum was likely to remain under pressure in both sectors. This is partly reflected in the indicator rating insufficient demand for building and construction work as a constraint, which remains elevated in both cases.The latest gross domestic product growth statistics from Statistics South Africa showed a fourth consecutive decline in output in the construction sector.Output fell by 1.4% quarter-on-quarter in the fourth quarter of 2017.Discouragingly, this quarter’s survey results suggest that the pressure in both building and civil construction activity could persist. The outlook for activity in both sectors is further clouded by the 2018 Budget, which reiterated the reduction in expenditure away from capital and towards consumption expenditure. "About 47% of the R85-billion in spending reductions consists of cuts to conditional infrastructure grants to provincial and local government,” she said.
http://www.engineeringnews.co.za/article/survey-shows-market-confidence-flat-among-general-builders-civil-contractors-2018-04-04/rep_id:4136
