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Construction Industry Under Pressure As Demand Slows

Durban – The construction industry outlook for KwaZulu-Natal looks bleak for the start of 2019, if it remains the same as it was in the fourth quarter of last year.

Construction ArtThe Construction Industry Development Board SME Business Conditions survey for the last quarter of 2018 showed that while in the national outlook there was a rise in general building confidence from 30 to 34 index points, this was contrary to the provincial picture in KZN.

The survey is conducted quarterly among Grades 3 to 8 board-registered contractors (categorised into grades 3 and 4, 5 and 6 as well as grades 7 and 8), both for general building and civil industries.

The main indicator used for analysis purposes is business confidence, which indicates whether respondents find the current business conditions satisfactory.

Building contractor confidence in the province shed another 5 index points to register a level of 10.

“Building activity slowed during the quarter and weighed on profitability. Furthermore, the outlook for KwaZulu-Natal does not look promising as the number of respondents rating insufficient demand for building work as a constraint increased to 88%, from 77% previously. This is the highest level on record,” said the survey.

In the final quarter of 2018, civil engineering contractor confidence improved to 35 index points nationally, from an all-time low of 27 in the previous quarter. In keeping with the national picture, civil contractor confidence in KZN also increased marginally to 19 index points, from a historic low of 18 in the previous quarter. However, the survey noted that construction activity in the province continued to slow during the fourth quarter.

“The net majority of respondents experiencing a slowdown in activity increased to 93%, from 76% previously. This is the worst level on record. As a result tendering competition also intensified,” the survey found.

Ntando Skosana, the project manager for monitoring and evaluation, said: “This suggests that, all in all, the industry remains under pressure.”

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