Johannesburg - A recovery in the construction sector is gaining
momentum but remains fragile, First National Bank and the Bureau for
Economic Research said on Monday.
The FNB/BER construction confidence index rose for the
third consecutive period, from 34 index points to 38 during the second
quarter of the year.
This is the highest level of the index since the end of 2009.
Results from the second quarter suggested that the
recovery was gaining momentum, with a noticeable pick up in construction
However, there was still reason to believe the recovery remained fragile.
"A number of constraints remain which could thwart the
pace of the overall recovery going forward," FNB and the BER said in a
An important feature of the recovery had been a consistent rise in construction activity.
During the second quarter, construction activity accelerated at a higher rate than in previous quarters.
Construction activity had been spurred by several sources.
Capital expenditure from provincial governments remained robust.
In the 2011/12 financial year, which ended in March,
provincial capex was 21.7% higher year-on-year. Several projects
had been initiated in the healthcare sector and in water and waste
However, municipalities continued to struggle. Only 41% of the total municipal capex budget was spent during the first
nine months of the financial year.
Public corporations saw an increase in civil
construction activity, with new projects from the Trans-Caledon Tunnel
Authority and the Airports Company SA.
Private sector construction activity contributed less. Mining production slowed and firms held back on expansion plans.
Construction employment increased modestly during the quarter.