Building sector on shaky ground with low confidence levels

2012-11-28 00:00

OVERALL confidence among participants in the building sector remained on distinctly shaky ground in the final quarter of this year, with little prospect of a revival in the new year.

Although the latest FNB/BER (Bureau for Economic Research) Building Confidence Index increased from 26 points in the third quarter of 2012 to 32 points in the fourth quarter, future prospects appear to be relatively bleak.

FNB chief economist Dr Cees Bruggemans told The Witness yesterday that the dismal confidence levels among architects and quantity surveyors — key participants in the planning process — point to a tough year ahead in the absence of a solid growth foundation.

“We’ve seen from the Reserve Bank’s leading indicator that the number of building plans passed remained weak. The lack of confidence among architects and quantity surveyers is an indication of what is yet to come.”

Confidence among retailers of building materials and hardware grew by 34 points, while sub-contractors increased by 13 points. However, Bruggemans stressed that the increases were mainly as a result of seasonal factors associated with the year-end period.

The index measures the confidence levels of six stakeholders, namely architects, quantity surveyors, main contractors, sub-contractors (plumbers, electricians, carpenters and shop fitters), manufacturers of building materials (cement, bricks and glass) and retailers of building material and hardware.

Critically, none of the sub-sectors surveyed managed to register an index level of above 50 — indicating that more than half of the respondents in each sub-sector were dissatisfied with prevailing business conditions.

The overall index has languished in negative territory for more than four years.

Bruggemans described the state of the industry as “fragile” at best.

“We expect sideways movement in 2013. There is nothing in the data that makes us excited. This industry is struggling. While it is true that the residential sector picked up, the non-residential sector has been the driving force up to now.”

 

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