Confidence in Building Industry on new “High”

p. It seems parts of the aftermaths of the various strikes (excluding the post offices) are beginning to fade and confidence in the developments ahead is being partly restored. While used car sales are up again – although new car sales are down due to the weak Rand – one of the main indicators, the construction confidence index is on par with 2008, just before the collapse of the industry due to high interest rates, boosting work across the rest of the building value chain, according to the latest FNB/BER building confidence index.

h3. Key Points from the Index:

*Confidence in the building sector, as measured by the FNB/BER building confidence index, jumped to 60 points in the fourth quarter of 2014.
*After edging up to 45 points in Q3, the index increased by 15 points.
*The current level of the index indicates that more than half of the respondents are satisfied with prevailing business conditions.
*The pace of growth in residential building activity quickened unexpectedly during the quarter, boosting work across the rest of the building value chain.
*Overall, the recovery in the building sector gained noticeable momentum in 4Q2014, following the mild increase in activity recorded last quarter.

h3. Building Sector Revival

p. “This is the highest level of the index since the beginning of 2008 and confirms that the building sector is in the midst of a revival,” said John Loos, property economist at FNB. The current level indicates that more than half of the respondents are satisfied with prevailing business conditions. Main contractor confidence jumped to 66 index points in Q4, from 53 last quarter. Confidence of both residential and non-residential contractors rose by double digits during the quarter. However, according to Loos: “Although confidence in both sectors improved, the residential market is looking far more buoyant than the non-residential market, a trend we picked up last quarter already.”

The growth in residential building activity accelerated nicely in Q4. This in turn boosted overall profitability. In contrast, non-residential building activity weakened. “Confidence was higher on the expectation that building activity and profitability will improve in 2015,” said Loos.

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