Recovery seen in S.Africa's building sector - CNBC Africa

Recovery seen in S.Africa's building sector


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Main contractor confidence increased to 66 index points. PHOTO: Schooling Building Contractors

The FNB/BER building confidence index showed that the pace of growth in residential building activity quickened unexpectedly during the quarter, which boosted work across the rest of the building value chain.

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“This is the highest level of the index since the beginning of 2008 and confirms that the building sector is in the midst of a revival,” said FNB property economist, John Loos.

“Although confidence in both sectors improved, the residential market is looking far more buoyant than the non-residential market, a trend we picked up last quarter already.”

The current level of the index also indicated that more than half of the respondents are satisfied with prevailing business conditions.

Main contractor confidence increased from 53 in last quarter to 66 index points in the fourth quarter, with confidence of both residential and non-residential contractors rising by double digits.

“Confidence was higher on the expectation that building activity and profitability will improve in 2015,” Loos added.

The continued improvement in the residential market also boosted activity in other building related sectors and retail sales and orders of building material remained robust.

“While other retailers are still under pressure, retailers of hardware have benefitted from the recovery in the building sector,” said Loos.

The survey further indicated that the rise in activity along the building pipeline suggests that the current recovery is sustainable. 

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However, it also showed that impending interest rate hikes may halt this recovery before it can gain more significant traction.