Civil contractor sentiment declines further

Civil contractor sentiment has declined further to 45 in the first quarter of 2025 from 48 in the fourth quarter of 2024.

Sentiment is measured on a scale from 0 to 100.

The FNB/BER Civil Confidence Index measures the sentiment of South African civil contractors regarding business conditions in the civil construction sector.

The current reading means that more than half (55%) of respondents are dissatisfied with prevailing business conditions.

Why the low sentiment

Siphamandla Mkhwanazi, Senior Economist at FNB, says the lower sentiment was underpinned by weaker overall profitability and a worsening rating of current business conditions. Activity, however, was somewhat better.

“Data from Statistics South Africa (Stats SA) showed that the real value of construction work contracted by 3.4% year-on-year in 4Q2024 [fourth quarter of 2024], from a 3.6% annual decline in 3Q2024.

“A further improvement in spending on construction works is likely next quarter.”

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Civil construction gaining momentum

He adds that the survey suggests that activity in the civil construction industry is slowly 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 [ArcelorMittal South Africa] now confirmed for 2Q2025 [ the second quarter of 2025], and if negotiations to keep it open fail, it is highly likely that shortages of construction material will soon be a key concern to contractors again.”

Why does the Index matter

The Index matters because it helps gauge the health of the civil construction industry in South Africa.

A decline suggests reduced infrastructure activity, which may signal economic weakness or lower government/private sector spending.

An increase indicates improving confidence, which could mean growth in infrastructure projects and better economic prospects.

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