The FNB Civil Construction Confidence Index on Monday revealed a drop from an index value of 60 in 1Q2009 to 48 in 2Q2009.

General business conditions were shown to be worse than expected at the time of the 1Q2009 survey.

Chief economist at First National Bank Cees Bruggemans said that in particular, the growth in construction activity executed during 2Q2009 disappointed.

"The moderation in workloads must be seen against the sharp deterioration in private sector fixed investment, notably those experienced in sectors such as the mining, manufacturing and property development industries," he said.

The survey found that new construction work was becoming more difficult to procure, with survey respondents having experienced a sharp increase in tendering competition during the survey quarter.

Bruggemans pointed to a net 64% of respondents in the 1Q2009 survey who reported a keener tendering environment compared with the same quarter a year ago.

The corresponding figure in 2Q2009 jumped to a net 91%.

Bruggemans said that margins and profitability consequently took a knock during 2Q2009.

Moreover, survey participants believed that the situation was likely to deteriorate further in 3Q2009.

"With turnover in businesses under pressure, overhead reduction has become imperative and hence it was not surprising that retrenchments took place during 2Q2009.

"Expectations were that this trend was likely to accelerate in the quarter ahead," Bruggemans said.

Looking ahead to 3Q2009, FNB noted that both business conditions and construction activity were not expected to deteriorate notably over the near term.