S.Africa Construction Slows in Q2 - BER Survey

By Reuters Posted 17 July 2006 @ 06:41 pm EET     Print     Reprint     E-Mail     Comments

JOHANNESBURG (Reuters) - Cfor residential buildings fell, but activity remained strong, an independent survey showed on Monday.

Construction is the fastest growing sector in Africa's biggest economy, and expanded by a blistering 13.7 percent in the first quarter of 2006, versus 12.4 percent in the final quarter of last year.

Official figures show construction only contributes about 3 percent of the economy but the data may be understated as it excludes public projects which would make a huge difference as the government pumps billions of rand into infrastructure.

Figures from the Bureau for Economic Research showed that its index for the sector, which also excludes state infrastructure, fell to 87 in the second quarter from a near record peak of 94 in the first quarter of 2006.

That was its fastest pace of growth in 25 years, according to BER senior economist Charles Martin. "We think the cycle has definitely turned, but it won't collapse," he told Reuters.

There were clear signs of a moderation in demand from the residential sector, even before the central bank raised interest rates on June 8 -- the first hike since September 2002, the BER research showed.

Demand conditions remained solid in the non-residential sector. The BER's building cost index rose by 6.2 percent in the first half of 2006 after leaping by 17.5 percent over 2005.