FNB building confidence index drops sharply

Frank Nxumalo
The FNB building confidence index declined sharply from a level of 86 in the fourth quarter of 2007 to 66 in the first quarter of 2008 according to data released by the Bureau for Economic Research (BER) at Stellenbosch University today.

BER said the index measures business confidence of major role players and suppliers involved in the building industry including architects, quantity surveyors, contractors, sub-contractors, wholesale and retail merchants, and manufacturers of building materials.

The index is compiled quarterly from building, manufacturing, retail and wholesale opinion surveys. The BER business survey in the building industry was conducted between February 4 and March 3, 2008.

General decline
Chief economist at the FNB, Cees Bruggemans, says that the deterioration in the index was the result of the business confidence of all sub-categories comprising the index declining during the first quarter of 2008.

Bruggemans said with the demand for residential buildings waning, the reduction in workloads forced respondents to further reduce the number of people employed. Nevertheless, the availability of skilled labour remains a noteworthy constraint hampering the building operations of respondents.

Forecasting the second quarter of 2008, Bruggemans said that the broad consensus gleaned from the survey results was that business conditions are likely to remain unfavourable in the residential sector of the building industry.