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Friday Dec 08, 2017

Building confidence worst since 2012

Confidence in the building industry in the fourth quarter of this year deteriorated to its worst level since the third quarter of 2012.

The FNB/Bureau for Economic Research (BER) building confidence index released yesterday dropped to 31 index points on a 100-point scale from 35 in the previous quarter.

The current level of the index indicates that almost 70 percent of respondents to the survey were dissatisfied with prevailing business conditions.

Four of the six sub-sectors reported lower confidence in the quarter, led by building material manufacturers.

John Loos, a property economist at FNB, said the survey results suggested further weakness in the building industry going into next year, particularly in the non-residential sector.

Loos said a further weakening in building activity in the non-residential sector, along with a slowdown in activity at the start of the building pipeline, weighed on confidence during the quarter.

The confidence of main contractors dropped to 34 in the fourth quarter from 44 in the previous quarter.

But Loos stressed that there was a stark difference between the sentiment of residential and non-residential contractors, which was even more pronounced in the fourth quarter.

Confidence among residential main contractors declined to 43 in the fourth quarter while that of non-residential main contractors fell to 11 as building activity for non-residential contractors deteriorated and that of residential contractors improved slightly from the decline in the previous quarter.

Loos said high vacancy rates across a range of non-residential sub-sectors, as well as weak underlying economic activity, seemed to be taking a major toll on the non-residential building sector.

He said the subdued prospects for the non-residential market clouded the outlook for the overall building sector.

Confidence among building material manufacturers dropped 21 index points to 16 in the fourth quarter after improving by 29 index points in the third quarter.

Loos said a decline in domestic sales and sales orders growth weighed on confidence in the quarter although the sector fared reasonably well from an export perspective.

Business Report

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