After falling to 29 in 2Q2018, the FNB/BER Building Confidence Index was unchanged in 3Q2018.

Wednesday, 16 April 2008 02:00

Building Confidence down

FNB's building confidence index, which measures the business confidence of all the major role players and suppliers involved in the building industry, declined to 66 points in 2008's first quarter, compared with 86 points in the last quarter of 2007.

Construction IndustryFNB chief economist Cees Bruggemans said in statement that the deterioration of the index was the result of the business confidence of all subcategories comprising the index declining during the period.

The confidence of building material retailers, manufacturers, wholesalers and contractors declined the most.

The business confidence of residential building contractors dropped from 76 points in the last quarter of 2007 to 60 points in the first quarter of the year, and Bruggemans stated that the growth in building activity in this sector disappointed.

The survey said that some 21% of respondents had expected a weakening in the first quarter of 2008, but that the latest survey revealed that in fact a net 39% experienced a decline in workloads.

"The tightening in demand conditions and increasing tendering competition currently being experienced in the residential sector continues to exert downward pressure on profit margins. It was, therefore, not surprising that a net 46% of respondents to the survey indicated that the growth in profitability of companies was below that of the same quarter a year ago," Bruggemans said.

With the demand for residential buildings waning, the reduction in workloads forced respondents to further reduce the number of people employed. Nevertheless, the availability of skilled labour remained a noteworthy constraint, hampering the building operations of respondents.

Respondents also indicated that they were expecting business conditions in the residential sector of the industry to remain "unfavourable".

Meanwhile, business confidence of nonresidential building contractors "rather unexpectedly" also declined relatively sharply, Bruggemans said.

The index fell to 78 points in the first quarter, compared with 92 points in the fourth quarter of 2007.

Respondents to the survey reported that business conditions turned out well below expectations.

At the time of the previous survey, about 2% of respondents were expecting an improvement in the growth in building activity, but first quarter results revealed that 20% of nonresidential contractor participants experienced a decline in activity.

"In view of the weaker demand conditions experienced, competition in tendering edged up sharply. As a direct result, margins came under pressure and the growth in profitability of nonresidential contractor respondents deteriorated notably. This trend is expected to continue in the coming quarter," Bruggeman said.

Looking ahead, he said that the survey's participants did not expect a reversal in current business conditions and they anticipated the profitability of companies to deteriorate further.

The index is compiled quarterly from the building, manufacturing, retail and wholesale opinion surveys undertaken by the Bureau for Economic Research (BER) at Stellenbosch University. The BER business survey in the building industry was conducted between February 4 and March 3.

 

Thursday, 19 April 2007 02:00

Slowdown dents building sector's confidence

The building confidence index has dropped by two points amid a general slowdown in construction activity, says First National Bank (FNB) chief economist Cees Bruggemans.

Construction IndustryThe bank's index declined marginally to 87 points this year from 89 points last year.

Bruggemans said the decline in business confidence was due to a moderation in all building industry categories, except quantity surveyors, where confidence increased by six index points.

Residential property development was taking a hard knock while commercial property was experiencing a boom.

However, the Bureau for Economic Research's latest survey found that business confidence of nonresidential building contractors had increased marginally from 93 index points last year to 94 points this year.

John Loos, property strategist with FNB Commercial Property Finance, said the high level of retail building activity was still taking place in "lagged" response to SA's consumer boom. Low vacancy rates were driving growth in industrial and office space property categories.

According to the Investment Property Databank, overall commercial property returns were still strong at 27,4%, which created the right climate for strong investment and growth.

While the overall profitability of building contractors had improved, shortages in skilled labour and building materials were affecting output.

Bruggemans said overall business confidence in the building industry remained comparatively high, with major industry players satisfied with conditions.

He said business confidence of residential building contractors was down from 89 to 84 points, because conditions in this sector had become less favourable compared with 2005 when growth was strong.

On the supply side, developers were increasingly encountering problems in getting municipal approval, and connection to water supply and sewage disposal, as a result of strained municipal infrastructure.

 

Friday, 09 February 2007 02:00

Dawn buoyed by robust building sector

Robust conditions in the chave again buoyed building materials supplier

Small was big during the construction sector reporting season that ended last week

THE building market is showing no signs of slowing down.

Tuesday, 18 January 2005 02:00

Firm December sales ahead of PPC forecast

Domestic cement sales grew ahead of expectation in the December quarter, despite signs of strain in the building sector, SA's largest cement producer

Thursday, 08 April 2004 02:00

Building sector should be more black'

Construction industry will need to double its output in next 10 years

Thursday, 19 February 2004 02:00

Building sector puzzled by R100bn hole'

Construction companies concerned about the absence of a mention of promised infrastructure in the budget

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