FNB/BER Building Confidence Index released on Monday indicated a slight decline in the index dropping from 43 in 4Q2025 to 42 in 1Q2026
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FNB/BER Building Confidence Index released on Monday indicated a slight decline in the index dropping from 43 in the fourth quarter of 2025 to 42 in quarter one 2026. Economists feel that the sector has been experiencing strain recently.
The Index said that the current rating indicates that close to 60% of respondents across the building sector value chain are dissatisfied with prevailing business conditions. The following changes were recorded in 1Q2026 (relative to 4Q2025): building main contractors (+11), quantity surveyors (+7), sub-contractors (+5), architects (-2), manufacturers of building materials (-13) and hardware retailers (-14).
The Index added that excluding building material manufacturer and hardware retailer confidence, sentiment of the “core” building sector ticked up to its best level since 2023 which pairs with a broad improvement in work. There are still some key areas of concern, however. The results this quarter once again reveal the extent of the strain on residential builders. Activity and profitability softened, and order books remained relatively weak.
Koketso Mano, a senior economist at FNB, said despite the interest rate cuts over the last year and a half, the recovery in demand for residential buildings is yet to mature. Meanwhile, other interest-rate sensitive sectors in the economy, such as vehicle sales, are doing very well.
The index said that the results are more upbeat in the non-residential sector, where confidence jumped to its best level in 18 years. “This is largely due to a sharp uptick in work among building sub-contractors (i.e. painters, electricians etc.).”
Mano said that this continued improvement in non-residential building activity is in step with the somewhat better property dynamics. In the office market, for example, vacancy rates are easing which is often paired with retrofitting and renovating of existing space to accommodate new tenant preferences. At the same time, there is evidence of investment by shopping centres to provide their own electricity and water. These instances highlight some of the demand drivers within the non-residential building sector currently.
The Index added that average activity among architects registered a notable increase in quarter one.
“This suggests that the trend of better building activity will likely continue over the next few months, at least. Similarly, activity among quantity surveyors improved, but the level was still below the long-term average for the series. In terms of confidence, readings of 42 and 43 were recorded for architects and quantity surveyors in 1Q2026, respectively,” it said.
The Index said that after increasing to 57 in 4Q2025, the business confidence of hardware retailers has fallen to 43 in the first quarter. The lower sentiment was at odds with the underlying data which remained quite buoyant, especially sales. Expectations for next quarter are also upbeat. Meanwhile, weaker domestic and export sales and lower productivity weighed on the sentiment of building material manufacturers.
The Index added that the sector likely contributed to growth in 1Q2026 but only marginally. Moreover, while this recovery should be maintained over the short-term, the pace will be constrained.
Professor Waldo Krugell, an economist at North-West University, said that construction has had it tough for many years now, due to uncertainty and high interest rates.
He said, “The report notes that "interest rate sensitive" vehicle sales have improved, but it has not yet been the case with residential homes. It is easy to say that a home is a different size and term of commitment and households that are still under financial pressure are careful to make it. This seems unlikely to change given the new worries about higher fuel prices, pressure on inflation, and possibly higher interest rates later.”
North West University Business School economist Professor Raymond Parsons said that the escalating Middle East crisis and the surge in the global oil price - together with other disruptions - now raise several red flags over South Africa’s immediate economic outlook.
“In the event of a ‘worse case scenario’ developing, confidence levels in the building sector will also be negatively affected,” he said.
Efficient Group Chief economist Dawie Roodt said that he expected the confidence to be a little stronger.
“Reason being we have seen a number of rate cuts and further interest rate cuts until recent developments. It is clear that the macroeconomic conditions are not what they can be. There are so many macroeconomic policy issues that are obstacles to economic growth and it is unlikely we will see significant improvement in this sector. To add to this, the ongoing tensions in the Middle East can lead to interest rate hikes,” he said.
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