After increasing to an eight-year high in Q3 2024, civil confidence decreased during Q4 2024 amid weakened activity growth. However, an improvement in overall profitability counteracted this, according to the latest FNB/BER Civil Confidence Index.
StatsSA data showed that investment in construction works, in real terms, declined by 5.5% year-on-year in Q3 2024, an improvement on the 9.5% y/y in Q2 2024. When measured on a quarterly basis, the sector recorded its first expansion since the end of 2022.
“The underlying weakness in civil construction work is disappointing given the increased rhetoric around the need to accelerate investment in infrastructure,” says Siphamandla Mkhwanazi, Senior Economist at FNB.
While more than half of civil contractors surveyed said they are ‘dissatisfied’ with business conditions, they also anticipate a marked increase in work in Q1 2025 which is at odds with the rating of insufficient demand for new work as a business constraint – a proxy for order books – which remained at its long-term average level.
“The lack of new demand as a business constraint eased noticeably until early 2023. Since then, it has been stabling at around its long-term average. Importantly, the index level does not suggest that there is any heightened impetus for infrastructure development,” he says.
Civil contractors are still concerned about the construction mafia and a lack of crucial skills within the industry.
