Afrimat index shows growth in construction industry
The Afrimat construction and building index continues to outperform the general economy, despite the dismissal of Pravin Gordhan as finance minister, evidence of state capture, ratings downgrades and SA’s return to recession.
After reaching an eight-quarter high in the fourth quarter of 2016, the index fell slightly in the first quarter of 2017 as political developments eroded business and consumer confidence, which slipped to levels last seen in the 2009 recession.
The index was recently launched by JSE-listed Afrimat, an open pit mining company that supplies industrial minerals and construction materials.
The company operates across rural areas in SA and this "paid off" amid a dearth of large infrastructure projects.
"Companies involved in the construction sector had to box cleverly to source projects or supply product to the sector," Afrimat CEO Andries van Heerden said.
"Our research showed that several smaller projects were available," he said.
On the whole, the index showed SA’s construction sector was on a stronger footing than seven years ago.
It had expanded 22.7% since the third quarter of 2010, the base period, or more than double the rate of real economic growth. The composite index of activity within the construction and building sectors is compiled by economist Roelof Botha on behalf of Afrimat.
He said it provided a "balanced and realistic view" of construction activity by smoothing out contradictory trends and conditions that made up individual components of the index.
The index is calculated from nine different indicators: the volume of building materials produced; the sales value of building materials; the value of buildings completed within larger municipalities; the value of building plans passed by larger municipalities; the FNB-Bureau for Economic Research (BER) building confidence index; the FNB-BER civil construction index; retail trade sales of hardware, paint and glass; formal employment in construction and the value added by the construction sector.