Builders not affected

Abdul Milazi

Abdul Milazi

Eskom's crippling power cuts will not adversely affect the current infrastructure roll-out as construction companies are not entirely dependent on the national utility for electricity.

This is according to First National Bank chief economist, Cees Bruggemans, who released the bank's Civil Construction Confidence Index yesterday.

"They (construction companies) may be affected on the margins here and there, but there won't be any change in fixed investments," said Bruggemans.

While construction companies used generators on sites for their power needs, Bruggemans said major companies in other sectors had anticipated the situation and invested in generators.

He said the FNB Civil Construction Confidence Index recovered notably during the fourth quarter of 2007 after the sharp drop experienced during the third quarter.

Confidence jumped from 70percent in the third quarter to 83percent in the fourth quarter.

Bruggemans said that it appeared as if the greater availability of new work had been the primary factor boosting confidence levels in this sector.

The SA Federation of Civil Engineering Contractors (SAFCEC) reported a 12percent increase in civil construction employment in the third quarter to 121600 jobs from 108 300 the previous year.

Concerning prospects for the first quarter of this year, Bruggemans said indications were that business conditions would remain positive and lively.

After increasing by 9percent in 2005, and nearly 14percent in 2006, real fixed investment spending increased by 16percent in the first three quarters of last year compared to a year ago.

According to the December quarterly bulletin of the SA Reserve Bank fixed investment started 2007 at an even more vigorous pace, with annualised growth of over 19percent in the first quarter.

However, this turned out to be an exception, also in comparison with previous years, with the annualised growth easing off to a more sustainable 13percent in the second quarter, and again in the third quarter.

He said this pattern was observed in various sectors including mining, government and residential buildings, machinery and equipment.

"For 2007 as a whole, fixed investment probably achieved 15percent to 16percent growth, also once we allow for revisions later this year. With fixed investment now having reached 21percent of GDP, the outlook remains for further steady gains in this ratio," said Bruggemans.