JOHANNESBURG - The FNB/BER Civil Confidence Index rose for a fourth consecutive quarter to 24points in the first three months of 2020, but much uncertainty clouds the outlook from the second quarter, FNB property economist Siphamandla Mkhwanazi said yesterday.
After rising by 7 points in the fourth quarter of 2019, the index gained a further 2 points to reach 24points in the first quarter this year.
Mkhwanazi said in an interview that as far as he was aware, big construction projects already under way were allowed to continue through the lockdown period, but under much stricter hygiene conditions.
However, questions remained about whether some of the big infrastructure projects announced earlier this year would continue with the Covid-19 pandemic.
He said although it was off a very low base, the rise in the index to the first quarter had partly been due to the announcements of plans to increase infrastructure spending on national roads by Sanral, improvements at the Cape Town and Johannesburg airports by the SA Airports Authority and on extensions in the port of Durban.
“In the light of the outbreak, we just don’t know if and when these projects will proceed,” said Mkhwanazi.
And while the index was higher in the first quarter, the level still, however, meant that the majority (more than 75percent) of respondents were dissatisfied with the prevailing business conditions.
“Last quarter we saw confidence improve on the back of higher activity. This quarter, while activity was effectively unchanged, higher profitability lifted sentiment,” he said.
According to Statistics South Africa (StatsSA), the real value of construction works declined by 1.6percent year-on-year in the fourth quarter of 2019. The first quarter survey results imply a similar decline in activity.
Although activity growth in the first quarter was more or less stable, the short to medium-term outlook had been upbeat.
Fewer firms reported that insufficient demand for new work, a proxy for the state of order books, was a constraint to their business.
“The more upbeat outcome for order books is likely related to increased tender activity, specifically around transport. In the national Budget more than R308 billion was allocated to transport and logistics-related infrastructure until the 2022/23 fiscal year. Construction activity related to renewable energy projects was continuing for now,” said Mkhwanazi.
“What we are seeing is a sustained, albeit slow, improvement in construction activity, which gradually lifted sentiment,” said Mkhwanazi.
The timing and magnitude of future rounds of the Independent Power Producer programme was also of concern, and with the exception of transport and logistics, so was the broadly downbeat outlook for infrastructure investment by the public sector.
The field work for the survey was conducted between February 12 and March 2.