The second-quarter Afrimat Construction Index (ACI) has recorded a 5% quarter-on-quarter increase, outperforming the country’s GDP by a considerable margin.

Economist Dr Roelof Botha, who compiles the quarterly index on behalf of Afrimat, says even though the index’s year-on-year increase of 0.7% was marginally lower than the 0.9% increase in GDP, it is encouraging that employment in the construction sector has increased by 95 000 since the second quarter of 2025.

“Against the background of the year-on-year decline in South Africa’s total employment during the second quarter, the ability of the sector to have created 95 000 new jobs is exceptionally good news.”

One of the highlights in the newest index is the consistency of the growth trends for four of the index’s indicators, all of which have recorded growth rates that are well above the latest consumer price index of 4.3% (as at July) on both a quarter-on-quarter and year-on-year basis.

These indicators are the wholesale trade sales of construction materials; employment in construction; the value of building plans passed by the larger municipalities; and the volume of building materials produced.

“The quarter-on-quarter increase of 8.5% in the volume of building materials produced is especially encouraging,” says Botha.

“Compared to the first quarter of the year, the real sales values of building materials also performed well, improving by 7%.”

Botha adds that although activity levels in the sector remain subdued, the ACI’s seasonally adjusted reading has been above the base period level of 100 (2011) for four successive quarters, signalling a recovery from the negative effects of the State-capture era and the Covid-19 pandemic.

“As was the case in the previous quarter, five of the ten indicators recorded positive year-on-year growth rates, while two of the other five recorded declines of less than 2%,” says Botha.

“The quarter-on-quarter performance was even more impressive, with six of the indicators recording increases in real terms.”

According to Botha, construction activity during the rest of the year and into next year is poised to benefit from several potential growth drivers.

These include the Metro Trading Services Reform Programme (MTSR), which has been boosted by a loan of $1-billion obtained from the New Development Bank.

The MTSR is a government-led initiative aimed at improving the governance, financial sustainability and operational performance of metropolitan municipalities, especially in water and sanitation, electricity and energy and solid waste management.

Another growth driver is the potential of a decline in oil and fuel prices when geopolitical stability improves, especially as a result of Venezuela’s intention to increase its oil production by a million barrels a day.

Lower fuel prices will place downward pressure on inflation, which could lead to a resumption of the rate-cutting cycle, hopefully by early next year.

Another positive is that Industry Insights has reported that South Africa's newly released 2026 Construction Book lists 110 projects worth around R396-billion, which is an increase of 71% from the R232-billion recorded in the 2025 edition.