In 2Q2020, the FNB/BER Civil Confidence Index fell to only five. Sentiment improved to 11 in 3Q2020 and by a further five points to 16 in 4Q2020.

Although better, the current index level means that the vast majority (more than eighty per cent) of respondents are dissatisfied with prevailing business conditions.

Underpinning the higher confidence was some improvement (off a very low
base) in construction activity. This resulted in an uptick in profitability.

“Relative to the third quarter, the rise in construction activity was not insignificant this quarter. However, it is likely restricted to specific sectors, most notably renewable energy. Moreover, activity remains below that registered just before the pandemic which is still fresh in the minds of contractors. As such, the higher activity was not sufficient to lift confidence meaningfully,” said Siphamandla Mkhwanazi, Property Economist at FNB.

Uncertainty about prospects over the medium term also weighed on
confidence. While respondents expect activity to improve further in 1Q2021, the lack of new work remains of deep concern.

“Civil contractors have been lamenting the poor state of order books for the last few years. This is likely due to the shortage of large-scale and long-term projects. So, while some 3 contractors may have work currently, they are unsure about the prospects in the coming quarters,” commented Mkhwanazi.

The FNB/BER Civil Confidence Index gained five points to reach 16 in 4Q2020.

According to Mkhwanazi, “As things stand, the increase in activity this quarter is unlikely to be sustained over the medium term, and this is what the low confidence reflects. At this stage, a meaningful rise in civil construction work depends on follow-through on plans for infrastructure development and faster implementation of bid window five of the renewable energy procurement programme.”

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 fourth quarter survey was conducted between 5 October and 16 November 2020.