FOLLOWING a decline to 48 in Q4 2024, the FNB/BER Civil Confidence Index fell a further three points to register a level of 45 in Q1 2025. The current reading means that more than half (55%) of respondents are dissatisfied with prevailing business conditions. The lower sentiment was underpinned by weaker overall profitability and a worsening in the rating of current business conditions. Activity, however, was somewhat better.
Data from Statistics South Africa (Stats SA) showed that the real value of construction works contracted by 3.4% year-on-year in Q4 2024, following a 3.6% annual decline in Q3 2024. A further improvement in spending on construction works is likely next quarter. Siphamandla Mkhwanazi, senior economist at FNB, says, “For a while now, surveys have suggested that activity in the civil construction industry is very slow-ly, but surely, gaining momentum. However, this is probably inadequate to address South Africa’s pressing infrastructure needs”.
The measured constraints to business operations were broadly lower this quarter than at the end of 2024. The rating of insufficient new demand as a business constraint (a proxy for order books) was only somewhat better and supports the overall view that work is set for a protracted improvement, at best.
Interestingly, the rating on the availability of construction material fell to its lowest level since before the Covid-19 pandemic. “With the closure of AMSA now confirmed for 2Q2 025, and if negotiations to keep it open fail, it is highly likely that shortages of construction material will soon be a key concern to con-tractors again,” noted Mkhwanazi.
In conclusion, the FNB/BER Civil Confidence Index shed three points to register a level of 45 in Q1 2025. Weaker overall profitability and business conditions largely account for the deterioration in sentiment.
Activity, however, improved while the rating of the lack of new demand as a constraint was moderately lower. “Growth in activity is, compared to the longer-term average, not faring too poorly. However, the amount of work currently underway is not enough to address South Africa’s deep infrastructure backlog while order books are consistent with only a lukewarm improvement going forward,” said Mkhwanazi.
The FNB/BER civil confidence index can vary between a maximum of 100 (which indicates that all re-spondents were satisfied with prevailing business conditions) and a minimum of zero.
