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Construction Monitor March 2024

Economy: The global gold price reached a new high due to geopolitical tensions, while oil prices surged past $90/barrel. Investors are monitoring the US Federal Reserve for potential rate cuts, with expectations lowered to two cuts starting in September 2024. Inflation in South Africa rose to 5.6 percent in February 2024, impacting monetary policy decisions, including a 12.9 percent increase in electricity prices approved by NERSA. Despite challenges in retail and manufacturing sectors, there are positive signs in mining and manufacturing output, reflecting some resilience in the face of economic pressures. Load shedding incidents eased, and private renewable energy production improved, contributing to manufacturing growth. Overall, the economic outlook remains cautious, with ongoing challenges in various sectors but some signs of improvement in key industries.

 

Construction: The Western Cape has made strides in urban development, approving a new spatial framework for Maitland and doubling infrastructure investment to support sustainable regeneration and youth development. Meanwhile, challenges persist in Gauteng, with reports of dilapidated buildings and water supply issues, leading to Moody's downgrades for some municipalities. However, there are ongoing infrastructure projects like the Lanseria Smart City and upgrades at O R Tambo International Airport. In the Eastern Cape, efforts to attract investments, especially in road infrastructure and renewable energy, are underway. Kwazulu Natal is dealing with water crises and disruptions in service delivery, alongside infrastructure repair projects. The construction industry faces inflationary pressures on materials, impacting residential markets and investment outlook. Provinces vary in infrastructure spending performance, with some increasing investments while others face budget cuts. Civil projects and tenders show mixed trends, with increases in awards but also rising cancellations and postponements, particularly in certain provinces.

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