South African construction industry continues to struggle amid tough economic conditions, a new report from Construction Industry Development Board (CIDB) has shown.
Building confidence ticked down to 30 on a 100-point scale from 33 as building activity slowed even further, while civil engineering confidence fell from an already depressed 31 index points to an all-time low of 26.
Across the grades, GBs in Grades 3 & 4 registered the biggest drop in confidence (-10), followed by Grades 5 & 6 (-2). Although Grades 7 & 8 experienced an improvement in sentiment (+6), the indicator remained at a very weak level of 29.
Ntando Skosana, project manager for construction industry performance at the CIDB, says the level of confidence is concerning because it implies that almost 75% of respondents are dissatisfied with prevailing business conditions.
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She adds that with the exception of a marginal uptick at the end of last year, general builder sentiment had trended downwards since the beginning of 2017.
On a provincial level, the Western Cape and Gauteng registered the biggest drops in confidence. In both these provinces the deterioration in sentiment was underpinned by a slowdown in activity.
Overall, said Skosana, the results of the survey point to continued and broad-based weakness in construction activity in the second quarter of this year.
“In addition to poor demand currently, there is no sign within the survey data to suggest that activity will improve over the short term.”
Early this year, South African Forum of Civil Engineering Contractors also raised concerns over what is said was steadily declining construction industry, citing lack of new contracts flowing from government’s purse, as well as increased violence and thuggery on local construction sites.
CEO Webster Mfebe said at the time that the deteriorating construction industry has led to major firms applying for financial rescue.
“This is happening in an industry that is historically a big investor in capital expenditure and skills development,” noted Mr Mfebe.
“Once we lose that capacity, it will take years to rebuild. We’ll increasingly see the likes of the Chinese and the French coming to Africa to build infrastructure, he said.”
At its peak in 2010 South Africa construction industry recorded exponential growth that resulted in major job creation, skills development fueled economic growth.
However, the years that followed have witnessed little construction activities with construction companies facing several challenges top being dwindling contacts from government.
South Africa construction sector outlook dim says report