The building confidence index increased to 41 index points in the second quarter of 2013‚ from 37 index points in the first quarter‚ according to a survey by First National Bank and the Bureau for Economic Research.

This marks the highest reading of the index since 2008 and the first time since 2005 that the index has risen for three consecutive quarters.

However‚ the current level indicates that the majority - approximately six out of 10 respondents in different sectors of the South African building industry - still rates prevailing business conditions as unsatisfactory‚ according to the survey‚ released on Tuesday.

The index can vary between zero - indicating an extreme lack of confidence - and 100‚ indicating extreme confidence. A notable acceleration in building activity saw main contractor confidence jump significantly‚ boosting overall confidence in the building sector.

The main contractor confidence jumped from 30 index points to 45 index points in the review period‚ marking the single biggest increase in the index since 2008 and places the current reading well above the long-term average of 36 index points. As a result of the increased building activity‚ sales and production of building materials were well supported.

The residential sector fared marginally better than the non-residential sector in the second quarter. Although both sub-sectors saw higher confidence and an increase in building activity‚ the improvement was more pronounced for residential contractors.

“There are tentative signs that the recovery in the residential building sector may be more robust than previously thought. However‚ it must be noted that this recovery comes off a very low base” said Sizwe Nxedlana‚ chief economist at FNB. Conversely‚ profit and tendering conditions in the non-residential sector were slightly more favourable than for residential contractors in the review period.

According to building material manufacturers‚ domestic sales and production picked up substantially‚ pushing their confidence to 27 index points‚ from 21 index points in the last quarter.

In contrast‚ the growth in retail sales of building materials slowed somewhat during the quarter. This is likely due to this segment’s exposure to the struggling SA consumer and‚ in part‚ explains the fall in confidence of retailers of building materials’ from 59 index points to 46 index points.

The building pipeline also continued to improve‚ with architects’ confidence rising to 46 index points while the confidence of quantity surveyors edged up by 4 points to 39. “The rise in architect and quantity surveyor confidence and activity‚ combined with the increase in general building activity provides reason to believe that the recovery in the building sector may be well supported going forward” said Nxedlana.

The survey noted that there were still risks to the continued recovery in the building sector. Most of the risk stems from weak domestic and international economic conditions which could thwart further growth in the building sector just as it starts gaining momentum.