Johannesburg – After declining 17 index points in the
fourth quarter of last year, the FNB/BER Civil Confidence Index
Arial;color:#222222"> gained some ground in the first
quarter, rising to 40 from 35.
This, however, is still below the 50 point threshold at
which confidence tips into positive territory.
The current level of the index means that sixty per cent
of respondents are dissatisfied with prevailing business conditions, FNB said
in a statement on Tuesday.
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Statistics
South Africa (Stats SA) calculated the real growth in construction works at 2.3
percent year-on-year in the fourth quarter of 2016, up from 1.3 percent in the
prior quarter.
FNB notes overall investment in the economy declined by
4.4 percent year-on-year in the fourth quarter of 2016. Civil contractors
reported a further improvement in construction activity in the first quarter, which
likely boosted confidence.
“Civil
construction activity held up fairly well towards the end of last year. This
was mainly due to a recovery in mining investment on the back of higher global
commodity prices. This quarters’ survey results suggest a further, albeit
marginal, improvement”, says Jason Muscat, Senior Economic Analyst at
“However,
mso-hansi-font-family:Calibri;mso-bidi-font-family:Arial;color:#222222"> while the renewed investment by the mining
sector is positive for construction activity, investment by the public sector
remains weak and is expected to be so at least over the short-to-medium term”,
mso-hansi-font-family:Calibri;mso-bidi-font-family:Arial;color:#222222"> adds
Muscat.
The concern regarding activity going forward is shared by
respondents. An increasing number of them cited the lack of new construction
work as a constraint to their business operations, says FNB.
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While
construction activity was somewhat higher in the quarter, conditions in the
sector are still tough. “Tendering
competition remains elevated, which has weighed on profitability”,
mso-hansi-font-family:Calibri;mso-bidi-font-family:Arial;color:#222222;
mso-bidi-font-style:italic"> notes Muscat.
Arial;color:#222222;mso-bidi-font-style:italic"> According
to the survey, overall profitability is at its worst level since 2011.
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FNB/BER Civil Confidence Index: Percentage satisfied
Going
forward, growth in the sector is likely to be limited by the weak outlook for
public sector fixed investment.
BUSINESS REPORT ONLINE