Afrimat has released the findings of its Afrimat Construction Index (ACI) for the 3Q24. The ACI is a composite index of the level of activity within the building and construction sectors in South Africa and is compiled by economist Dr Roelof Botha on behalf of Afrimat.
“Similar to the reading last quarter, seven of the 10 constituent indicators comprising the index are in positive territory, but of particular note this time around is the significant improvement in three indicators this quarter,” said Dr Botha.
These include “Buildings Completed”, particularly in the metros and larger municipalities, which was up by 23.3 per cent, “Employment in construction” up by 14.6 per cent, and “Sales Values of Building Material” up by 5.9 per cent.
Other indicators that recorded meaningful improvements on QoQ were the value of “Building Plans Passed,” the volume of “Building Materials Produced” and the remuneration of construction sector employees, as indicated in “Salaries & Wages – Construction”.
“However, compared to the 3Q23, the general lethargy in construction sector activity has persisted, with the ACI declining by 1.3 per cent overall since then,” commented Dr Botha.
He added that little doubt exists over the depressing effect that high interest rates continue to exert on the construction industry, most notably exceptionally high debt-servicing ratios and a persistent decline in the real value of credit extension, as also confirmed by several other key economic indicators. During the 3Q24, South Africa’s real GDP only managed a 0.3 per cent increase year-on-year and declined from the level recorded in the second quarter, whilst the latest Absa/BER purchasing managers’ index (PMI) for manufacturing has again slipped to below the neutral level of 50.
The residential property market also continues to lag, with the BetterBond Index of home loan applications having declined by 13 per cent since the Monetary Policy Committee (MPC) of the South African Reserve Bank started to implement a restrictive monetary policy stance, resulting in the highest commercial lending rates in 14 years, despite the absence of demand inflation in the economy.
Afrimat activity
Afrimat’s CEO, Andries van Heerden, said that the integration of the Lafarge businesses is proceeding extremely well and is being undertaken meticulously despite being one of the fastest the Group has done. “There are only a few more steps to reach full integration, and we are pleased to announce that the cement processing plants are now providing Afrimat branded product, with the first 32.5 N and 42.5 N bags of cement introduced into the market.”
Van Heerden confirmed that while the group is not yet seeing a massive uptick in the infrastructure development and maintenance side of the economy, slowly but surely small pockets of demand are opening up. He went on to reiterate that South Africa needs improvement in the ports, rail logistics, and a generally higher economic growth rate, to stimulate the economy further and to help provide much-needed jobs.
by Dr Roelof Botha on behalf of Afrimat, South Africa
