Although the index increased, the current level suggests that on average more than 6 out of 10 respondents in different sectors of the building industry still rated prevailing business conditions as unsatisfactory.

Compared to 4Q2012, the following changes in confidence levels took place, namely, retailers of building materials (+12), manufacturers of building materials (+10), architects (+9), main contractors (+2), quantity surveyors (+2) and sub-contractors (-1).

Confidence of the main contractors increased from 28 in 4Q2012 to 30 in 1Q2013. This continues the trend seen over the past few quarters, where confidence had slowed, but steadily improved.

However, the marginal increase in confidence does not reflect the more significant rise in activity during 1Q2013. Building activity expanded at its highest rate since the start of the recession in 2008, in line with expectations. Main contractors also forecast an even bigger rise in activity in 2Q2013.

The rise in activity was more pronounced in the case of non-residential contractors compared to residential contractors. This in part explains the divergence in confidence, with non-residential contractor confidence increasing while the confidence of residential contractors declining marginally in 1Q2013. However, the profit margins of non-residential contractors came under renewed pressure despite the rise in building activity. In contrast, profitability of residential contractors improved.

The demand for building materials increased during 1Q2013. This has resulted in the confidence of retailers of building materials registering the biggest increase of the sub-components of the FNB/BER building confidence index. Confidence now stands at 59 index points. In addition, wholesalers of building materials (not included in the index) also saw an improvement in in confidence on the back of rising sales and order volumes during 1Q2013. The rising demand for building materials shows that the building recovery is gaining some traction. The increase in building activity of main contractors seems to be leading to higher growth in building material sales. However, further sales growth could be inhibited if consumer finances come under more pressure.

For similar reasons, building material manufacturers' confidence increased from 11 to 21 index points during 1Q2013.

The building pipeline also looks more promising, especially that of architects. This resulted in an increase in architects' confidence from 29 to 38 index points. Quantity surveyor confidence also increased, despite a modest deterioration in activity.

Sub-contractor confidence remained largely unchanged, slipping by one index point to 41 during 1Q2013. This was the only component to register lower confidence during the quarter. Sub-contractors are further down the building cycle. This means that much of the increase in main contractor activity in 1Q2013 will likely only filter through to this sector later on.

In conclusion: The recovery in the building sector likely accelerated during 1Q2013. There was a marked improvement in the activity of main contractors, as well as increased demand for building materials.

Furthermore, the building pipeline, which was relatively weak over the past few quarters, now seems more robust. This bodes well for the sustainability of the building recovery.

However, it must be noted that although the results confirm that the building upturn is gaining momentum, current levels suggest that it will continue to be subdued. Retailers of building materials could also face headwinds if consumer finances deteriorate.