Q2’23 Afrimat Construction Index: Building returns

South Africa's construction sector has shown a significant improvement in the second quarter, driven by a surge in the number of building plans passed and completed. The Afrimat Construction Index rose by 5.8 per cent in the second quarter, reaching 115.4. This growth is a positive sign for the industry, indicating increased construction activity and the creation of new jobs. Dr. Roelof Botha, Economic Advisor at Optimum Group, shared his insights on the sector's performance and the potential for sustained growth. One of the key factors contributing to the sector's growth is the significant increase in building plans passed, which rose by 18.8 per cent in the second quarter. This surge has fueled construction activity across various projects, leading to a boost in the overall index. Dr. Botha emphasized the importance of sustaining this momentum and highlighted the rise in employment within the construction sector. Employment in construction saw a remarkable increase of 8.6 per cent quarter on quarter and 10.8 per cent year on year, indicating a positive trend in job creation. Dr. Botha noted that the construction sector added over 100,000 new jobs in the second quarter, outperforming other key industries such as finance, business services, and retail. This growth in employment signifies a promising outlook for the sector and reflects the vitality of the construction industry. The types of jobs created in the construction sector are primarily in the formal economy, with a focus on infrastructure development and road construction projects. Dr. Botha highlighted the significance of construction-related activities in driving job creation, particularly in tandem with investments in renewable energy. He noted a substantial increase in machinery and equipment imports, emphasizing the need for continued construction activity to support renewable energy initiatives. Renewable energy projects play a crucial role in enhancing South Africa's energy resiliency and reducing dependence on traditional power sources. The growth in greenfield projects within the energy sector presents opportunities for sustained job creation and long-term economic development. Private-public partnerships are also emerging as a key driver of infrastructure projects, facilitating collaboration between government entities and private sector stakeholders. Dr. Botha underscored the importance of collaboration and privatization in advancing infrastructure development, citing the efficiency and effectiveness of the private sector in project execution. He noted the positive impact of private sector involvement in initiatives such as the Durban Harbour expansion, the Olifant River project in Limpopo, and the upgrade of land ports. These partnerships are instrumental in driving innovation and efficiency in infrastructure projects, ultimately benefiting the economy. Looking ahead, continued investment in infrastructure, renewable energy, and public-private partnerships will be critical for sustaining growth in South Africa's construction sector. Dr. Botha's insights shed light on the opportunities and challenges facing the industry, highlighting the potential for sustainable development and job creation. As the sector continues to evolve, collaboration and innovation will be key drivers of progress and success in the construction industry.