Civil confidence index slips
The First National Bank (FNB)/Bureau for Economic Research (BER) Civil Confidence Index decreased to 40 in the third quarter, from 43 in the second quarter, with 60% of respondents dissatisfied with prevailing business conditions.
The index measuring activity growth declined to its worst level since 2022, underpinning the softer sentiment reading, FNB and the BER state.
Tendering price competition intensified and, combined with lower activity, resulted in lower overall profitability.
More optimistically, the rating of insufficient demand for new work remained below its long-term average. Expectations for activity in the fourth quarter were also upbeat.
“It is surprising, given the deterioration in the underlying indices measuring activity and profitability, that sentiment remains this high. The last time that there was such a synchronised weakness in the business environment was in the second quarter of 2022, and then business confidence was at ten,” says FNB senior economist Siphamandla Mkhwanazi.
He adds that still-optimistic expectations for activity in the fourth quarter and order books at long-term levels partially explain why sentiment remained relatively high; however, there is a risk that sentiment in the fourth quarter could fall markedly if a further weakening in activity, against expectations, is recorded.
“It is disappointing that, despite all the noise around infrastructure investment, civil contractors have not yet seen much benefit,” says Mkhwanazi.
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