Construction Monitor August 2017

Locally, the data has been more positive in the second quarter of the year, and indicates that the South African economy has grown in the second quarter, exiting the technical recession we have found ourselves in. The mining sector for example, grew in two out of the three months in the second quarter, expanding by 2.6 percent and 4.1 percent in the April and May, but declining marginally by 0.8 percent in June. Retail sales as a whole rose by 2.2 percent in the second quarter, and on a monthly basis, the 2.9 percent y-y growth in June was the strongest figure so far this year. The retail sector was the main reason behind the contraction in GDP in the first quarter, which largely came as a surprise to economists. Along with a growth in retail sales, wholesale trade sales have also bounced back in the second quarter, rising by 1.1 percent.

The nominal value of civil projects awarded increased by 8 percent in July, which marks the first increase in five months. This is off the back of more positive data in June, which was still a decline, but only by 4 percent. Overall, over the last 12 months, civil activity is still in positive growth territory, expanding by 24.5 percent, boosted by strong growth towards the end of 2016 and first two months of 2017 This is according to the nominal value of civil projects awarded. Overall, these activity levels are still higher than we would have expected, as the current data indicates there has been an uptick in activity over the last year. This is of course ignoring the fact that postponements and cancellations remain at historically high levels. Road projects remain a category where we are optimistic, based on detailed analysis of infrastructure spending in this category from the 2017/18 budget. Our expectations have also come to fruition, based on the fact that over the last 12 months (from August 2016 to July 2017) there has been a 31.5 percent increase in the total value of road projects that have been awarded.