Construction activity loses some momentum in quarter three but sentiment ticks higher

After dropping from 45 to 41 in 2Q2025, the FNB/BER Civil Confidence Index recovered partially to 43 in the third quarter (3Q) of 2025. The current reading means that close to 55% of respondents are dissatisfied with prevailing business conditions, FNB said.

The uptick in sentiment contrasts with a significant decline in activity.

Siphamandla Mkhwanazi, senior economist at FNB, said, “While the activity index weakened considerably in 3Q2025 compared to the previous quarter, it remains close to its long-term average. Importantly, the index has held relatively high levels in recent quarters. Since it reflects annual growth, base effects may explain the lower reading. However, if this weaker level persists over the next two or three quarters, it would be cause for concern.” 

According to Statistics South Africa (Stats SA), the real value of construction works contracted by only 0.3% on an annual basis in  the second quarter of 2025, from a 3.2% decline in quarter one 2025. The 3Q2025 survey results suggest a slightly more pronounced decrease in 3Q2025. “Overall, the sector is still on track for a much-improved performance for full year 2025 than the 6.1% drop recorded in 2024,” said Mkhwanazi.

FNB said respondents’ own expectations for work next quarter and the rating of insufficient new demand as a constraint to business operations (a proxy for order books) reiterate the stance that the availability of work is not yet a major concern. Although the latter registered its highest level since quarter four 2022 of 71, it merely returned to its long-term average.

The business mood improved despite a marked weakness in activity growth. However, FNN said this was likely due to base effects and actual spending on civil construction is unlikely to be as downbeat.

“Looking ahead, it remains prudent to monitor the risks to sentiment in the sector over the short- to medium-term. These include persistent inefficiencies in tender adjudication, payment processes, project management, and crime, as highlighted by survey respondents. On a positive note, recent progress on key reforms in energy and logistics is encouraging, although it may take time to translate into increased activity in the sector”, said Mkhwanazi.

BUSINESS REPORT