Activities marginally up

Posted On Monday, 16 August 2004 02:00 Published by eProp Commercial Property News
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The BER Composite Business Confidence Index for the Building Industry has shown a further marginal increase during the second quarter of 2004

Construction IndustryThe BER Composite Business Confidence Index for the Building Industry has shown a further marginal increase during the second quarter of 2004. The overall impression gained is that the upswing in the building cycle is intact. In view of the fact that interest rates are unlikely to increase before 2005, further positive growth is expected in the building industry over the next 12-18 months.

Building activity in the residential sector remains very positive. The business confidence of contractors firmed further and no less than 90% of respondents polled were satisfied with current business conditions. The higher levels of building activity resulted in a further increase in employment levels in the sector. Respondents to the survey expected the current favourable business conditions to continue during the third quarter of 2004. Building conditions in the non-residential sector have shown a notable improvement and indications are that the demand for non-residential building work is recovering over a broad front. Respondents to the second quarter survey anticipated a further improvement in building activity during the coming quarter.

Business conditions in the civil engineering sector remain tight and unsatisfactory, thereby exerting severe downward pressure on profit margins. The non-availability of large government contracts and a moderation in the demand for civil engineering services in the mining sector as a result of the strong rand, are adversely affecting the industry. Only a marginal improvement in activity is expected in the third quarter of the year.

The rate of increase in building costs, as measured by the BER Building Cost Index, has risen by 6% during the second quarter of 2004. Given the perceived recovery in non-residential building demand, building costs are expected to exhibit a rising tendency going forward as the easing in tendering competition will allow contractors to increase their profit margins.

 

Last modified on Tuesday, 22 October 2013 10:43

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