THE FNB/BER Civil Confidence Index released on Tuesday declined by three index points to 40 in the third quarter (3Q2026), which economists warn indicates further declines in infrastructure investment.
The Index showed that Civil Confidence was stable at 43 during the first half of 2026. “In 3Q2026, sentiment eased to a still-above-average 40. The current reading means that 60% of respondents were dissatisfied with prevailing business conditions.”
The Index measuring activity growth declined to its worst level since 2022, underpinning the softer sentiment reading.
According to Statistics South Africa, the real value of investment in construction works rose by only 0.1% year-on-year in 2Q2026, down from 4.8% in 1Q2026. The survey results point to further weakness in 3Q2026,
The Index showed that tendering price competition intensified and, combined with lower activity, resulted in lower overall profitability.
“More optimistically, the rating of insufficient demand for new work remained below its long-term average. Expectations for activity next quarter were also upbeat.”
Siphamandla Mkhwanazi, Senior Economist at FNB said that it is surprising, given the deterioration in the underlying indices measuring activity and profitability, that sentiment remains this high.
“The last time that there was such a synchronised weakness in the business environment was in 2Q2022, and then business confidence was at 10.”
The Index said that still-optimistic expectations for activity in 4Q2026 and order books at long-term levels partially explain why sentiment remained relatively high
Mkhwanazi added that the risk is that sentiment in 4Q2026 could fall markedly if a further weakening in activity, against expectations, is recorded.
“It is disappointing that despite all the noise around infrastructure investment, civil contractors have not yet seen much benefit. Meanwhile, renewable energy and mining projects that were a key source of work not too long ago seem to have lessened.”
Economist Dr Simphiwe Madikizela, a senior lecturer at the University of South Africa’s School of Graduate Business and Leadership said that a decline in the FNB/BER Civil Confidence Index was a concern, particularly because the civil-construction industry is closely linked to infrastructure investment, municipal spending, roads, water, electricity and private-sector capital formation.
Madikizela added the BER defines the index as the percentage of respondents satisfied with prevailing business conditions in civil construction.
Madikizela said that a reading of 40 means that roughly 40% of surveyed civil-construction firms are satisfied with prevailing business conditions, while the majority are not.
“This is therefore not simply a decline in sentiment; it points to a sector still operating below comfortable levels of business confidence. The concern is also that confidence had already fallen sharply from 52 in Q4 2025 to 43 in Q1 2026, before remaining at 43 in Q2."
"So, if Q3 has now fallen to 40, it suggests that the improvement anticipated earlier in the year has not yet translated into sufficiently strong activity to restore confidence,” Madikizela said.
Madikizela said that civil construction depends heavily on infrastructure projects — roads, bridges, water infrastructure, electricity networks, sanitation and municipal infrastructure. “Weak confidence suggests that contractors may still be seeing insufficient or delayed project pipelines.”
Madikizela added that when there are fewer projects competing for contractors’ capacity, companies tend to compete more aggressively for available tenders.
“That can squeeze margins. This was already evident in Q2, when the BER reported weaker activity growth and keener tendering-price competition, although better order books and stable profitability partially offset those pressures.”
Madikizela said that civil construction is relatively labour-intensive and supports substantial employment directly and through suppliers. “If contractors experience weak order books for an extended period, they are less likely to expand payrolls and may reduce hiring.This is particularly important because construction has recently been identified by FNB as an area of labour-market weakness, with declining compensation and employment losses linked to subdued investment conditions.”
Madikizela said infrastructure investment has a multiplier effect. “A road project, for example, does not only benefit the construction contractor; it creates demand for cement, steel, machinery, transport, engineering, professional services and other suppliers. Therefore, persistently weak civil-construction confidence can become a broader economic issue rather than merely a construction-sector issue.”
yogashen.pillay@nationalmg.co.za