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Johannesburg - A recovery in the construction sector gained momentum in the first quarter of 2013, First National Bank (FNB) and the Bureau for Economic Research (BER) said on Thursday.
The FNB/BER construction confidence index jumped from 36 index points in the last quarter of 2012 to 51 points in the first quarter of 2013.
This was the highest reading of the index in four years. Sizwe Nxedlana chief economist at FNB said the surge was a result of restored profitability in the construction sector.
"Construction firms have been able to restore profitability following a prolonged period of intense margin pressure," Nxedlana said.
"However, this could be constrained if construction activity growth continues at the slow pace seen in the first quarter of 2013."
Growth in construction activity remained subdued, he said.
Nxedlana said construction activity was expected to rebound in the second quarter of 2013. "The reading of 51 is relatively positive, especially compared to 2011 and 2012 when the average was 22 and 38 index points respectively," he said.
"Confidence increased even though the slower growth in construction activity continued for the second consecutive quarter."
After accelerating during the first nine months of 2012, the pace of construction activity slowed in fourth quarter of 2012.
Nxedlana said the slower tempo continued into the first quarter of 2013.
"The slower growth in the last six months could therefore be due to the completion of a number of large projects before new ones were started."
He said labour unrest at Eskom's Medupi power station, which resulted in a 10-week delay in construction work, was likely put a damper on construction activity of total public corporations during the first quarter of 2013.
"However, this could have been partially offset by on-going investment into road infrastructure by SA National Roads Agency Limited."
Continued uncertainty in the mining sector might have inhibited construction work in the private sector even further in the first quarter of 2013, he said.
Provincial capital expenditure had also increased. "Provincial capex in particular may have increased as government departments usually try to complete projects before the end of the financial year in March," Nxedlana said.
