The FNB/BER Civil Confidence Index (CCI) reached an almost eight-year high of 47 in 1Q2024. In 2Q2024, sentiment edged lower to 44. The current reading means that more than 55% of respondents are dissatisfied with prevailing business conditions. FNB Senior Economist’s Siphamandla Mkhwanazi tells us more.
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The slight deterioration in the business mood mimics the slowdown in activity. Nonetheless, the activity growth indicator is still well above its long-term average. According to Statistics South Africa (Stats SA), the real value of construction works decreased by 7.8% year-on-year in 1Q2024.
A more upbeat reading is possible for 2Q2024. “The survey results of the last few quarters are not nearly as pessimistic as the Stats SA data suggests. This is largely due to the nature of the survey, which is predominantly focused on very large contractors and those that work in the private sector,” remarks Mkhwanazi.
Encouragingly, work is expected to increase over the next few months. The rating of the lack of new demand as a business constraint – a proxy for order books – reached its best level since 2008. “The significant improvement in order books is a very positive development and in effect means that prospects for future work are similar to that registered when the bulk of construction related to the 2010 FIFA World Cup final was underway or about to start,” he says.
FNB/BER Civil Confidence Index, 2024Q2
In conclusion
The FNB/BER Civil Confidence Index fell to 44 in 2Q2024, from 47 in 1Q2024.
While slightly lower, activity growth remained well supported. Moreover, the pipeline of work improved noticeably. According to Mkhwanazi, “projects related to renewable energy have continued to sustain civil construction activity. However, there seems to be a shift away from predominantly solar projects to wind”.
As a general comment, while still above the long-term average, sentiment is relatively low. “Given the underlying conditions, especially activity, confidence should be higher. However, uncertainty regarding the political environment and the impact of crime, corruption and government inefficiency is likely weighing on business confidence,” concludes Mkhwanazi.
About the survey
The FNB/BER civil confidence index can vary between a maximum of 100 (which indicates that all respondents were satisfied with prevailing business conditions) and a minimum of zero (indicating that all respondents were dissatisfied). A level of 50 indicates that the respondents are equally divided between those satisfied and dissatisfied.
The fieldwork for the second quarter survey was conducted between 9 and 27 May, 2024.
Top graph: Growth in construction activity, 2024Q2.
