SA’s construction sector shows promising signs of recovery in Q4

The construction sector in South Africa has shown promising signs of recovery in the fourth quarter of 2020, with the Afrimat Construction Index (ACI) climbing 2.5 percent after the government lifted Covid-19 restrictions. The ACI, which is a composite index of the level of activity within the building and construction sectors, indicates a positive trend in the industry. Economist Roelof Botha, who compiles the index, suggests that the early start to the summer holiday season in December dampened what could have been an even stronger recovery in construction activity. Botha highlights the significant increase in hardware sales and building plans passed, indicating a surge in home refurbishments as people adjust to remote working environments. This shift has led to a noticeable increase in construction activities in various regions, especially in the North West province, where informal players are also contributing to the sector's growth. Despite challenges such as absenteeism due to Covid-19 fears, Botha remains optimistic about the sector's future. He predicts a stronger recovery starting from the second quarter of 2021, as issues like government infrastructure spending and supply chain disruptions are addressed. Botha also emphasizes the need for greater transparency and updates on government projects to facilitate better planning and coordination within the industry. The gradual increase in mortgage bond values and the rise in bond originator activity indicate a positive trend in construction spending, with smaller players leading the way in home renovations and refurbishments. Botha's insights shed light on the evolving landscape of the construction sector in South Africa and the potential for sustained growth in the coming months.