South Africa’s building industry struggled in Q1’2025

Building sentiment, as measured by the FNB BER Building Confidence Index, saw a marginal improvement to 41 in Q1 2025, from 40 in Q4 2024 - indicating that while sentiment improved slightly, the majority of respondents remain dissatisfied with business conditions. Despite optimism among contractors for future activity, current challenges such as declining profitability, weak residential investment, and municipal inefficiencies continue to weigh on the sector. CNBC Africa is joined by Siphamandla Mkhwanazi, Senior Economist at FNB for more.

Mon, 10 Mar 2025 10:54:32 GMT

Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video

AI Generated Summary

Despite a slight improvement in sentiment, the majority of participants in South Africa's building industry remain dissatisfied with current business conditions.
Challenges such as declining profitability, weak residential investment, and municipal inefficiencies continue to weigh on the sector.
Optimism among contractors for future activity is tempered by risks such as global political uncertainty and delays in municipal project approvals.

South Africa's building industry continues to face challenges in the first quarter of 2025, as the FNB BER Building Confidence Index showed a marginal improvement to 41 from 40 in the previous quarter. Despite this slight uptick in sentiment, the majority of respondents in the sector remain dissatisfied with current business conditions. Siphamandla Mkhwanazi, Senior Economist at FNB, highlighted the ongoing issues in the industry, including declining profitability, weak residential investment, and municipal inefficiencies. The interview with CNBC Africa shed light on the key structural and policy interventions needed to shift the industry's sentiment and potential trends in the sector. Mkhwanazi discussed the expectations for future activity, challenges faced by contractors, and the comparison of current sentiment to historical trends in the building sector. The interview also touched on the performance of the residential and non-residential sectors, as well as the confidence shown by hardware retailers. Additionally, Mkhwanazi shared insights on the lag between positive sentiment and actual investment growth, risks that could impact the industry, and emerging trends in both private sector and government infrastructure spending that could influence the building sector. Despite some optimism among main building contractors for future work, uncertainties and constraints within the industry continue to pose risks to the sector's growth. The conversation with Mkhwanazi delved into potential solutions to boost the building industry and enhance its performance in the coming quarters.