Infrastructure ambitions grow but economic headwinds intensify
South Africa’s construction sector showed further signs of stabilisation during May 2026, although the recovery remains uneven and faces growing economic headwinds. Government continues to advance major infrastructure, energy, logistics and water initiatives, while private-sector investment interest remains evident across several provinces. Encouragingly, investment in construction works increased by 5.1% year-on-year during the first quarter of 2026, supported largely by infrastructure-related spending, while non-residential building investment returned to growth.
The broader economic environment, however, became more challenging during the month. Consumer inflation accelerated to 4.0%, prompting the South African Reserve Bank to increase interest rates by 25 basis points. Economic growth expectations were revised lower, with most forecasts now pointing to growth of around 1.0% to 1.2% in 2026. Rising oil prices, global uncertainty and ongoing infrastructure constraints continue to place pressure on businesses and investment decisions.
Construction market indicators presented a mixed picture. Wholesale sales of construction materials increased strongly, suggesting improving procurement activity and growing support from larger infrastructure and commercial projects. In contrast, household-driven construction activity remains relatively subdued, while construction-sector liquidations remain significantly higher than a year ago, highlighting the difficult operating environment still facing many contractors and suppliers.
Looking ahead, the volume of planned infrastructure investment, project announcements and ongoing structural reforms provides reasons for cautious optimism. The challenge is increasingly not a lack of projects, but the ability to convert plans, budgets and investment commitments into physical construction activity. While opportunities continue to emerge across selected sectors and regions, sustainable growth will depend on improved implementation, delivery and execution throughout the infrastructure value chain.
