The FNB/BER Building Confidence Index released today suggests that the building sector confidence has gained some ground in Q3. The index rose to 38 points in Q3 2016 from 34 in Q2 2016 bringing it to the level recorded in Q1 2016. It is important to note however, that despite the improvement in confidence for Q3 2016, the current level of the index reflects that 60% of respondents remain dissatisfied with prevailing business conditions.
Main contractor confidence rose to its highest level in more than a year at 44 in Q3 2016 from 38 in Q2 2016 mostly due to an increase in profitability coming out of the less keen tendering price competition as building activity is largely unchanged from Q2 2016. The confidence of manufacturers of building material rose by 3 index points to 21 in Q3 2016, but at 21 the index remains relatively low overall. Quantity surveyor confidence jumped by 15 index points to 50 mainly on the back of noticeable improvement in activity. Architect activity was also better, but only marginally, and showed a modest 1 index point rise to 43.
In contrast, building material sales remained low at 31 index points. Activity among building sub-contractors was slow in Q3 2016 probably as a result of weak building sector activity at the start of the year, while the building sub-contractors index remained unchanged in Q3 2016 at 40 index points.
Overall, although profitability improved, the building sector remained under pressure in Q3 2016.
Please follow our regular economic updates on twitter @lingskevin
Download the presentation slides