Confidence among KZN building contractors rose sharply after floods. Rest of SA is more muted

• The business confidence of building contractors in KwaZulu-Natal jumped 23 points to 49 points, in the second quarter of 2022.
• This rise brought it to an almost 8-year high for the province.
• This rise coincides with heavy flooding happening in KwaZulu-Natal in the second quarter.
• The cost of the flood damage is estimated to be R17 billion.
• Nearly 4,000 homes had been “completely destroyed”, and over 8,300 homes were partially damaged.
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The business confidence of building contractors in KwaZulu-Natal jumped 23 points to 49 points, an almost 8-year high, in the second quarter of 2022.

This is according to the Construction Industry Development Board’s SME Business Conditions Index, compiled the by Bureau for Economic Research (BER).

The business confidence of contractors in KwaZulu-Natal jumped by 23 points to an almost 8-year high of 49. Source: BER

Though the BER did not say the rise in the confidence of building contractors in KwaZulu-Natal was related to the intense flood damage in the province on 11 to 12 April, it is notable that the big swing in confidence happened in the same quarter the floods occurred.

During that period, parts of KwaZulu-Natal received between 200 mm and 400 mm of rainfall in 24 hours.

According to the government, nearly 4,000 homes had been “completely destroyed”, over 8,300 homes were partially damaged, and 40,000 people had been displaced.

The cost of the flood damage is estimated to be R17 billion, with the Passenger Rail Agency of South Africa (Prasa) alone saying it needed R3 billion to fix its infrastructure in the province.

Though the building sector in KwaZulu-Natal, might be feeling more confident, it has yet to see this anticipated big upswing play out, as it has just seen a mild improvement in activity in the quarter.

SME business conditions index increased to 42 in 2022Q2, from 35 in 2022Q1. Source: BER

More muted

The growth in business confidence of building contractors in KwaZulu-Natal, outstripped the rise for the whole country, which rose to a five-year high, from the 35 points in the first quarter to 42 points.

KwaZulu-Natal saw only a mild improvement in activity. Source: BER

By comparison, the rest of the country’s confidence was rather muted. Gauteng and the Western Cape was unchanged at 32 and 29 respectively.

A net 60% of respondents surveyed in Gauteng said activity was lower in the second quarter compared to a year ago, from only 21% in the first quarter.

In the Western Cape, however, activity improved. A net 37% of respondents in the Western Cape indicated that activity was lower in second quarter than a year earlier, down from 58% in first quarter.

Sentiment among contractors in the Eastern Cape, however, fell to 41, from 62 in in the first quarter.