Construction sector is picking up steam after 2020 closures

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FIRST Quarter statistics show the construction industry has recovered from last year’s Covid-19 lockdowns, noted economist Roelof Botha said yesterday.

He said the Afrimat Construction (ACI) index climbed 5.4% in the first quarter of 2021, compared to the pre-Covid first quarter of 2020, when in comparison GDP fell 3.2% during the same period.

The year-on-year level of the index in the first quarter was even more remarkable, given that there were tighter foreclosure restrictions in January and February, Dr Botha said.

He said that while the index showed the construction industry to be “roughly where it was before Covid”, however, activity levels remained low in the sector due to unmet needs for infrastructure and housing development in the country, what he said. was exacerbated by the collapse of municipalities.

Quarter over quarter, the ACI fell 5.6%, but this was a seasonal decline and reflected an increase in activity in the industry every four quarters, as entrepreneurs s ‘striving to avoid penalty clauses in contracts, to complete their work before their period of leave, and because the DIY business also recovered in the fourth quarter.

He expected the ACI to surprise on the upside in the second quarter of 2021, but the outlook for the third quarter has been clouded by uncertainty over the length of the third wave of the pandemic in South Africa.

One area of ​​optimism was a significant recovery in the value of construction plans adopted by large municipalities, which generally acts as a leading indicator for future construction activity.

He said that Statistics SA’s construction industry value added figures, which revealed a 17.5% drop in the sector for the first quarter, only reflected contributions from contractors, which only accounted for ‘part of the sector and did not reflect, for example, sectoral data that is reflected elsewhere in sales of hardware and building materials.

The latest ACI data follows a sharp recovery in the third and fourth quarters of 2020. “The ACI recorded an index value of 109 points in the first quarter, although only three of the nine constituent indicators recorded growth positive compared to the previous quarter. “

Dr Botha said lifting most of the lockdown regulations that were in place during the second quarter of 2020 resulted in a V-shaped recovery for most key sectors of the economy, including construction, although that the effects would persist.

He said some growth drivers that could boost construction activity included strengthening the rand / dollar exchange rate by more than 30 percent since early April 2020, a 30 percent drop in the cost of mortgage financing and the implementation of government policy. Recovery and reconstruction plan.

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