Cement data point to booming construction sector

The outlook for the construction industry may be improving after improved cement and steel sales. Image: Bulding Workers International

The construction sector is a large employer and created 34‚000 jobs in the 12 months up to the third quarter of last year when total employment was just over a million people.

This 3.3% y/y increase in construction employment is ahead of the 2.4% y/y rise in real value added by the construction sector‚ which may indicate that Stats SA could revise its construction data higher.

This is in part due to the long lag on cement sales data imposed by the Competition Commission.

Prior to April 2012‚ cement sales data were released monthly a few days after month-end‚ but the Competition Commission then ruled that the cement data could only be released on a quarterly basis after a minimum of 90 days.

In the first nine months of 2013‚ cement sales grew by 6.2% y/y compared with a 2.9% rise in 2012‚ a 3.3% gain in 2011 and a 7.8% slump in 2010.

Although construction activity has consistently improved over the past three years‚ the growth in activity ratcheted up more significantly over the past few months as there was 9.8% y/y rise in cement volumes in the second quarter.

This higher growth comes from a number of sources such as provincial spending on capital projects‚ continued capital outlays by Eskom on the Medupi‚ Kusile and Ingula power stations as well as ongoing capital expenditure by Transnet which supported construction activity.

The Presidential Infrastructure Co-ordinating Commission (PICC) has identified and developed projects and infrastructure initiatives from state-owned enterprises as well as national‚ provincial and local government departments.

These have been clustered‚ sequenced and prioritised into a pipeline of strategic integrated projects.

Some projects at provincial level may be put on hold due to the national and provincial government elections later this year‚ but the government's focus on service delivery should see an improvement in capital expenditure in 2014.