The FNB/BER Building Confidence Index recovered from a two-decade low of 22 points recorded in the third quarter and rose by three points to 25 in the fourth quarter. Photo: Reuters

JOHANNESBURG – The FNB/BER Building Confidence Index recovered from a two-decade low of 22 points recorded in the third quarter and rose by three points to 25 in the fourth quarter.

But the current level of the index indicates that only one out of four respondents are satisfied with prevailing business conditions in the country.

The report, released on Wednesday, found that four sub-sectors – hardware retailers, architects, sub-contractors, and main contractors – registered higher confidence in the fourth quarter.

However, this was almost entirely offset by a 35-index point drop in building material manufacturer confidence.

Siphamandla Mkhwanazi, senior economist at FNB, said the underlying indicators suggested a mild improvement in activity, but off a low base.

“While it is clear that activity in the building sector improved, from a low base, in [the fourth quarter of] 2019, it is too soon to tell if this will be sustained. 

“The high level of tendering price competition and the elevated rating of the lack of new building demand as a business constraint, suggest that work is still relatively scarce. This does not even take into account the poor state of the broader economy,” Mkhwanazi said.

The FNB/BER building confidence index can vary between zero, which indicates an extreme lack of confidence, and 100 indicating extreme confidence. 

It reveals the percentage of respondents that are satisfied with prevailing business conditions in architects, quantity surveyors, main contractors, sub-contractors such as plumbers, electricians, carpenters and shop fitters, manufacturers of building materials, and retailers of building material and hardware.

BUSINESS REPORT