JOHANNESBURG – South Africa’s construction industry posted modest growth in the opening quarter of 2026, with the latest Afrimat Construction Index (ACI) pointing to early signs of stabilisation after several challenging years for the sector.
The index rose by 0.3% year-on-year during the first quarter, supported by stronger activity in completed construction works and building projects, as well as gains in employment and sales of construction materials.
While overall momentum remains subdued, economists say the figures suggest the industry may be entering a more stable phase.
Compiled quarterly by economist Dr Roelof Botha for Afrimat and adjusted for inflation, the ACI serves as a barometer of activity across South Africa’s building and construction markets.
Three Consecutive Quarters of Improvement
One of the most encouraging developments is that the seasonally adjusted index has now improved for three consecutive quarters, marking the first such streak since the economic disruption caused by the 2020 recession.
According to Botha, stability has become increasingly visible in two of the sector’s most important indicators: the value of non-residential buildings completed and the value of construction works undertaken.
The labour market has also delivered a positive surprise. Employment in construction expanded by approximately 74,000 jobs compared with the same period last year, outperforming many other sectors of the economy.
Although construction contributes only a relatively small share of South Africa’s gross economic output, it accounted for roughly 11% of all new jobs created year-on-year during the quarter, underscoring its importance as a source of employment.
Mixed Performance Across Key Indicators
The ACI’s underlying data paint a picture of gradual improvement rather than a broad-based boom. Half of the index’s ten constituent indicators registered year-on-year gains, while one remained unchanged.
Most of the remaining indicators recorded only modest declines, suggesting that downward pressures are easing.
Lower borrowing costs have been one factor supporting activity, with reduced interest rates helping lower financing expenses for construction projects.
Market optimism has also been bolstered by improving international conditions and expectations that monetary easing could continue later in the year if inflationary pressures remain contained.
Tender Activity Picks Up
Another encouraging signal comes from public and private project pipelines.
Construction tender activity recorded double-digit growth in both February and March, reflecting stronger demand for upcoming projects.
Industry data for the first four months of 2026 indicate overall tender activity increased by more than 11% compared with a year earlier, with particularly notable gains reported in KwaZulu-Natal, the Eastern Cape, and the North West provinces.
At the broader economic level, South Africa’s gross domestic product (GDP) expanded by 1.4% year-on-year during the first quarter, while improved investor confidence has been supported by a resilient currency and more favourable sovereign debt outlooks from international ratings agencies.
Interest Rate Outlook Remains Key
Economists believe the trajectory of interest rates will play a significant role in determining whether the construction recovery gains traction.
Should inflation continue to moderate and the South African Reserve Bank resume cutting rates, financing conditions for developers and contractors could improve further.
Residential construction, in particular, is expected to benefit from lower borrowing costs.
Afrimat Highlights Quarrying and Infrastructure Projects
Afrimat CEO Andries van Heerden said the company’s renewed emphasis on aggregate quarrying has strengthened its position as demand for construction materials gradually improves.
The company recently completed the disposal of selected aggregate quarries and ready-mix concrete plants as part of its acquisition of Lafarge South Africa Holdings. The transaction, valued at R215 million, is expected to help reduce debt while sharpening Afrimat’s operational focus.
Across the country, Afrimat continues to supply materials for a range of infrastructure developments.
These include hydroelectric projects in the Eastern Free State, wastewater treatment and residential developments in the Western Cape, biomass and industrial facilities in KwaZulu-Natal, road rehabilitation works, commercial projects in Gauteng, and renewable energy developments in Lephalale.
The company says sustained demand for aggregates and ready-mix concrete is keeping operations active across its nationwide footprint.
Energy Sector Development Provides Additional Optimism
Looking ahead, Afrimat believes recent regulatory decisions affecting South Africa’s energy-intensive industries could provide an additional boost to economic activity.
The approval of reduced electricity tariffs for the ferrochrome sector is expected to support industrial production and safeguard employment, while the company anticipates its Nkomati Anthracite Mine will continue ramping up toward full production over the coming months.
Although the latest ACI figures stop short of signalling a full-scale recovery, they suggest South Africa’s construction industry is beginning to regain its footing, supported by improving project activity, resilient employment growth, and cautious optimism surrounding the country’s broader economic outlook.
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