Hardware retailers lead drop in building confidence

Picture: Business Day

The overall index fell five points from the first quarter to 34 points in the second quarter, the First National Bank (FNB) sponsored survey found.

Confidence was lower in all the subsectors surveyed, with the largest drop recorded among hardware retailers.

This echoed Tuesday’s RMB/BER business confidence index, where retail confidence fell sharply in the second quarter, by 18 points to 26.

BER says its building confidence index differs from its business confidence index in that it covers the whole pipeline, from planning (represented by the architects and quantity surveyors), to renovations, additions, owner-builders, retailers, the informal sector and manufacturers of building materials, to the actual erection of buildings by main contractors and subcontractors.

In the building confidence index, hardware retailers polled by BER showed a nine-point drop to 30. The fall in confidence was due to a sharp deterioration in sales and profitability.

"The marked slowdown in hardware sales seems to point to the end of the DIY boom which has boosted the building — and retail — sector since the latter part of 2014," FNB property economist John Loos said in the report.

The confidence of architects and quantity surveyors fell to 42 and 35 index points respectively. For quantity surveyors, this marked the lowest confidence since the fourth quarter of 2012.

The survey found a stark difference in confidence among builders in different provinces. The Western Cape fared significantly better than the rest of the country both in terms of confidence and building activity during the quarter. "This is likely due to increasing migration to the Western Cape by residents from other provinces," Loos said.