South Africa’s BCI rises in second quarter

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FILE PHOTO: The buildings with the logos of three of South Africa's biggest banks, ABSA, Standard Bank and First National Bank (FNB) are seen against the city skyline in Cape Town, South Africa, September 3, 2017.REUTERS/Mike Hutchings/File Photo
FILE PHOTO: The buildings with the logos of three of South Africa's biggest banks, ABSA, Standard Bank and First National Bank (FNB) are seen against the city skyline in Cape Town, South Africa, September 3, 2017.REUTERS/Mike Hutchings/File Photo

The First National Bank (FNB)/Bureau for Economic Research (BER) Building Confidence Index (BCI) increased by 12 points to 39 in the second quarter of 2021, the highest level of the index since the first quarter of 2018, said FNB on Monday.

The rise in confidence came from hardware retailers and building material manufacturers while the confidence of main contractors in particular is still quite depressed.

“The index measuring activity was noticeably better this quarter and understandably so,” said FNB Property economist Siphamandla Mkhwanazi.”As such, the improved activity is largely due to extremely low base effects and not suggestive of a vastly improved level of activity in the building sector.”

Mkhwananzi said 60 percent of the respondents are not satisfied with current business conditions.

He said, “Internationally we have seen building input prices rise dramatically over the past few months as global demand far outstrips supply.”

“At the same time, domestic building demand remains too weak for contractors to fully pass these prices on to clients. As such, some contractors have had to resort to ‘suicide pricing’ to secure contracts.”

The FNB/BER building confidence index can vary between zero and 100. It reveals the percentage of respondents that are satisfied with prevailing business conditions in six sectors, namely architects, quantity surveyors, main contractors, sub-contractors, manufacturers of building materials and retailers of building material and hardware. Enditem

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