Civil construction confidence index unchanged

The FNB Civil Construction Confidence Index, compiled by the Bureau for Economic Research (BER) at Stellenbosch, remained unchanged at 83% in the first quarter of this year compared to the fourth quarter of 2006

Commenting on the index, Cees Bruggemans, chief economist of First National Bank, said 83% of senior managers participating in the survey, including those at larger construction companies, continued to express satisfaction with current business conditions. This is a very high level in historical terms and reflects the buoyant state of construction activity in South Africa.

This observation is also supported by reports that the competition in tendering has declined.

Growth in activity and employment in the construction industry continued to improve in the first quarter, although not quite as fast as expected by respondents at the time of the previous survey during 4Q2006.

Bruggemans said construction companies expressed even greater optimism on both scores for the second quarter, suggesting that activity levels and employment in the sector will continue to expand rapidly.

According to the South African Federation of Civil Engineering Contractors (SAFCEC), construction employment reached 110 500 in the fourth quarter of last year, up by 10% over the same quarter in 2005. Employment is expected to keep growing strongly in 2007.

Constraints facing construction activity continued to tighten, also reflecting the boom times. Shortage of skilled labour was noted by yet more FNB/BER respondents, rising from 96% in the fourth quarter to 98% in the first quarter. Inadequate supply of construction materials increased from 87% to 91%.
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