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Quarterly Financial Statistics Construction September 2024

While information related to gross fixed capital formation estimates for the third quarter of 2024 on construction investment has already been released with the release of the GDP estimates, the quarterly financial statistics released for September 2024 includes more detailed financial information on various sectors in the economy, including the construction sector, that are important indicators for the sector.  It also provides a breakdown between large, medium and smaller players in the sector. The dataset includes 13 years historical data (from March 2010 - September 2024).  This dataset also provides a clearer view on actual turnover in the construction industry, as it excludes the contribution of imported machinery and equipment that is included in the gross fixed capital formation estimates.

Contradictory to GFCF estimates released for Construction Investment, turnover in the construction sector increased by the strongest pace in 7 years (June 2016) on a year-on-year basis, up 10.8 percent (nominal) excluding the post Covid period (2021).  Turnover by medium size businesses, continued its robust growth trajectory for the 4^th consecutive quarter with an increase of 21.2 percent y-y. Larger contractors also showed improved performance, with a 6 percent increase, the strongest annual increase in 7 quarters (March 2023). Turnover generated by smaller contractors also made a turnaround and increased by 9.5 percent y-y, showing a recovery following steep declines reported in the previous three quarters.   Despite this improved performance however, margins were under pressure and slowed to an overall average of just 0.1 percent, from 3.1 percent in the previous quarters and was the worst performance since June 2022.  Robust growth in turnover by the medium contractors came at a cost, as strong competition continued to dampen profitability, and resulted in an overall 10.2 percent loss in Q3. Larger contractor’s profit margins stabilised at a less than favourable 1.4 percent, while smaller contractors averaged 7.7 percent, from 13.5 percent in Q2. In rand terms, industry profits have fallen by 64 percent y-y in the first three quarters of 2024 compared to the same period in 2023.

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