Confidence in South Africa’s building sector slipped further in the second quarter, reflecting weaker activity, rising costs and growing uncertainty across the industry.
The FNB/BER Building Confidence Index fell to 38 in the second quarter from 42 in the first quarter, meaning more than 60% of firms are unhappy with current business conditions.
The drop comes as momentum seen earlier this year faded, particularly in non-residential construction, where activity had briefly improved before reversing in the latest quarter.
FNB senior economist Siphamandla Mkhwanazi said higher input costs and global uncertainty — especially linked to the war in the Middle East — have disrupted the sector.
“Work in the non-residential building sector has gained momentum since 2024, albeit off a low base,” he said.
Mkhwanazi said this momentum has been disrupted by higher internal costs and greater uncertainty, leading to project postponements.
“Projects that are proceeding are also significantly less profitable than they otherwise would have been.”
The survey shows a broad-based deterioration across the sector. Confidence fell among architects, main contractors and hardware retailers, and dropped sharply among sub-contractors, whose index plunged by 17 points to 35 as activity slowed.
Homeowners and landlords are facing rising costs and are cutting back on discretionary spending.
— FNB senior economist Siphamandla Mkhwanazi
By contrast, sentiment improved slightly among building material manufacturers and quantity surveyors, the latter benefiting from increased demand for cost management in an uncertain environment.
Activity has weakened in both residential and non-residential segments.
Residential building remains under pressure after several subdued years. Though earlier indicators — such as building plans passed — suggested a possible recovery this year, the latest survey points to continued weakness in available work. Shifting interest rate expectations have also dampened sentiment.
Non-residential construction has also lost steam, with companies citing a lack of new demand and thinner order books compared with the previous quarter.
Overall, the sector continues to shrink. The total value of building investment fell by an annual rate of 8.4% in the first quarter, extending a downturn from late last year. The survey suggests little improvement in the second quarter.
Sub-contractors have been hardest hit, reflecting both weaker demand from main contractors and reduced spending by households.
“This is in line with weaker activity among main contractors, but also likely reflects softer demand for smaller projects,” said Mkhwanazi. “Homeowners and landlords are facing rising costs and are cutting back on discretionary spending.”
There were, however, some pockets of resilience.
Architect activity remained relatively steady, suggesting that early-stage interest in new projects has not collapsed. Meanwhile, quantity surveyors reported stronger demand, as developers seek tighter cost control in a volatile environment.
Manufacturers also faced sharply higher production costs, though their confidence edged up from a low base. Hardware retailers reported still-decent sales volumes, even as sentiment declined.
The overarching theme in the second quarter, Mkhwanazi said, is the impact of global shocks on local costs and project viability.
“Input costs jumped significantly between the first and second quarters. In some cases, projects scheduled to commence were put on hold due to higher costs and general market uncertainty,” he said.
Without these pressures, sentiment might have stabilised or even improved, he added.
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