Builders still under stress

2011-07-20 00:00

CONFIDENCE levels in the civil construction industry remain depressed, despite a slight uptick in the second quarter of 2011.

The FNB Bureau for Economic Research index for civil construction confidence during the second quarter of 2011, which was released yesterday, came in at 23 from 21 in the previous quarter.

This means that almost one in four respondents in the industry were satisfied with the prevailing conditions in the industry.

The chief economist of FNB, Dr Cees Bruggemans, told The Witness yesterday that although there are signs of improvement in the sector, industry conditions will take a long time to improve.

Industry role players such as the South African Federation of Civil Engineering Contractors have pointed out that although the industry is expecting slow growth in 2011, indicators such as the number of tender invitations and the value of contracts have shown signs of improvement in recent quarters.

“The industry appears to be picking up slowly. It is still early days and this is off low levels. The recovery is far from secure.”

“The industry is still under stress. It takes time and we could see some improvement in the next 12 to 18 months,” said Bruggemans.

The mild uptick has originated from an increase in activity in public sector corporations projects, as well as work from the provincial government and the private sector — particularly the mining sector.

He added that the building sector remains depressed while poor governance and financial management have led to a lack of projects in the local government sphere.

Bruggemans said the constrained pace of growth in fixed investment does not bode well for SA’s ability to reduce the infrastructure bottlenecks that hamper higher levels of economic growth.

“We need a far more active construction industry to achieve this,” he said.

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