Building and construction industry nightmare continues
PRETORIA – The latest Construction Industry Development Board (CIDB) small and medium enterprise business conditions survey report released yesterday showed that the lingering nightmare in the building and construction industry continues.
The survey revealed that civil contractor confidence had improved to 35 index points on a 100-point scale in the fourth quarter from the all-time low of 27 in the previous quarter.
But the report said the percentage of respondents who experienced a slowdown in activity remained at 65 percent, the worst level on record, and 53 percent of respondents experienced a tougher tendering environment compared to 48 percent previously.
Building contractor confidence ticked up marginally to 34 index points in the fourth quarter from 30 points in the previous quarter but remains below the long-term average of 40 points and in negative territory at below 50 index points.
The report also said the underlying indicators suggested the industry was “still under immense pressure” and reported that building activity lost momentum during the survey quarter.
It said a net majority of 45 percent of respondents reported a decline in building activity compared to 37 percent in the previous quarter, while tendering competition intensified and insufficient demand for building work remained a key constraint.
“The latter does not bode well for building activity going forward,” it said.
Ntando Skosana, the project manager for monitoring and evaluation at the CIDB, said despite the improvement in sentiment, the building sector continued to suffer from a shortage of work.
Skosana said building contractors in Grades 3 and 4 continued to struggle, because of a further slowdown in activity, which weighed on sentiment with confidence falling to a new record low of 26 points and the building activity indicator deteriorating to its worst level on record.
The net majority of respondents experiencing a slowdown in activity increased to 68 percent in the fourth quarter from 56 percent in the previous quarter.
The report said that, discouragingly, the proportion of Grade 3 and 4 respondents experiencing insufficient demand for building work as a constraint increased to 83 percent in the fourth quarter from 78 percent in the previous quarter.
“This implies the outlook for building activity growth among the smaller contractors could remain constrained in the near future,” the report said.
Skosana said sentiment among building contractors in Grades 5 and 6 and Grades 7 and 8 remained “at depressing levels” despite improving.
Building confidence has dropped by a cumulative 30 index points in the Western Cape over the past two years to 26, its lowest level in more than four years.
“Building contractors in the Western Cape previously outperformed their provincial counterparts but came under pressure in the third quarter.
“This continued into this quarter. Discouragingly, the outlook for this province does not look promising as demand for new building work remains a key constraint,” she said.
Gauteng was the only province to experience an improvement in building industry sentiment, with business confidence deteriorating in all the other provinces.