Building confidence rose slightly in the third quarter of 2009, FNB said on Tuesday as it released its Building Confidence Index (BCI).

The index increased slightly from an index value of 30 in the second quarter of 2009 to 32 in the third quarter.

Of the six sub-components of the FNB BCI, three registered a rise, while declines were recorded in the remainder during the third quarter.

The index found that compared to the second quarter 2009, improvements in confidence levels were recorded among building contractors (+1), manufacturers (+23) and retailers of building materials (+13).

On the other hand, declines occurred in the case of architects (-7), quantity surveyors (-4) and building subcontractors (-15).

FNB chief economist Cees Bruggemans said a closer analysis of the survey data showed that the downward spiral in the residential sector was probably close to a bottom.

The normalisation of the de-stocking cycle of building merchants at the retail level had resulted in improved demand experienced by manufacturers of building products, he said.

"In contrast, the downswing in the non-residential sector is still firmly in place, hence the weakening of building confidence in the case of architects, quantity surveyors and non-residential building contractors," Bruggemans said.

He said the business confidence of residential contractors increased marginally from a low 17 in the second quarter of 2009 to 19 in the third quarter.

"This marginal recovery in confidence levels could well point to the private residential building cycle reaching a lower turning point.

"Business conditions turned out in line with expectations, although much weaker than the same period a year ago," he said.

Growth in building activity remained very sluggish during the third quarter of this year, but it showed a marginal improvement compared to the situation in the second quarter of 2009.

He said that given the weak state of the effective demand for residential buildings, the tendering environment remained very tight and competitive.

"In a sector known for intense adversarial tendering during periods of slowdown in the overall business cycle, respondents indicated that the overall growth in profitability of enterprises remained under severe pressure."

He said in this regard, a net 84 percent of the respondents to the survey reported lower profit growth than in the same quarter a year ago.

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