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SA construction index shows "extremely cautious" optimism

South Africa's construction industry is beginning to revive activity, with demand in most segments still muted following a post-World Cup 2010 slowdown in project spending, but edging up slowly, The Oxford Business Group reports on its website.

At the same time, a proposal by a senior government minister for the establishment of a state-owned contractor may dampen private sector confidence.

After several quarters of underwhelming performance, there have been signs that the construction sector is easing slowly out of the doldrums, although the outlook is far from positive. In their latest survey of the construction industry, the First National Bank (FNB) and the Bureau for Economic Research (BER) say that an industry sentiment of 21 was posted for the third quarter of 2011. With a score of 100 indicating a positive outlook, this figure still indicates an extremely cautious forecast.

The present level of the confidence index, said Cees Bruggemans, FNB's chief economist, showed that some two-thirds of respondents remain dissatisfied with prevailing business conditions. "Activity is up, but the slow rate at which new work seems to be appearing could hamper the pace of the recovery in this sector," he told The Oxford Business Group.

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