An index measuring activity growth fell to its lowest level since 2022, contributing to the softer business sentiment reading, FNB and the Bureau for Economic Research (BER) report.
Competition on tender prices intensified. Combined with lower activity, this put pressure on overall profitability.
There were some more positive signs. The share of respondents citing insufficient demand for new work—a proxy for order books—remained below its long-term average, while expectations for activity in the fourth quarter were upbeat.
“It is surprising, given the deterioration in the underlying indices measuring activity and profitability, that sentiment remains this high,” says FNB senior economist Siphamandla Mkhwanazi. “The last time there was such synchronised weakness in the business environment was in the second quarter of 2022, when business confidence stood at ten.”
Still-optimistic expectations for fourth-quarter activity and order books near their long-term levels partly explain why sentiment has remained relatively high, he says. However, sentiment could fall sharply in the fourth quarter if activity weakens further, contrary to expectations.
“It is disappointing that, despite all the noise around infrastructure investment, civil contractors have not yet seen much benefit. Meanwhile, renewable energy and mining projects, which were key sources of work not too long ago, seem to have lessened,” Mkhwanazi says.
