The FNB Building Confidence Index fell from 88 points in the second quarter to 85 points in the third quarter of 2007, but still remained at high levels, FNB said on Tuesday.

"The decline in the overall index is a reflection of a weakening in business confidence in all of the constituent parts, except in the case of wholesalers of building materials where confidence improved, and building sub-contractors where the index remained static," it said.

The Index measures the business confidence of all the major role-players and suppliers involved in the building industry such as architects, quantity surveyors, contractors, sub-contractors, wholesale and retail merchants, and manufacturers of building materials.

FNB chief economist Cees Bruggemans said despite the slight moderation, business confidence in the overall building industry still remained at a relatively high level.

The business confidence of residential building contractors receded from an index value of 82 in the second quarter of 2007 to 76 in the third quarter.

"The drop in confidence can possibly be explained by the fact that overall business conditions turned out below expectations," Bruggemans said.

He said the higher interest rates environment, which led to affordability deterioration for new houses, and the implementation of the new credit laws in June, played a major part in the less optimistic business environment.???

Looking ahead, Bruggemans said business conditions were likely to remain stable or could even improve marginally in the coming quarter.

I-Net Bridge