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However, the current level of the index indicates that more than 75% of respondents are dissatisfied with the prevailing business conditions.

Only one of the sub-sectors surveyed registered higher confidence. The sentiment gains were led by hardware retailers (+52) and building material manufacturers (+40).

Siphamandla Mkhwanazi, Property Economist at FNB believes that given how very depressed confidence levels were in the second quarter, it is not surprising that confidence ticked up this quarter with the measures to control the spread of Covid-18 less constraining.

Hardware retailer confidence rose to ’55’ in the 2020’s third quarter from a mere ‘3’ in the second quarter. Boosting confidence was a better-than-expected improvement in sales volumes. In addition, respondents expect sales growth to continue in this upward trajectory into the fourth quarter of 2020. Contributing to the lifting confidence was a sharp rise in order volumes.

“Respondents were pleasantly surprised by the extent to which the DIY and the small-scale additions and alterations market improved as more people work from home. We already saw real hardware retail sales rise 5.5% y-o-y in June. This was further supported by the lower interest rate environment and consumers saving on work-related expenses such as transport. For now, these windfalls mitigated the downward pressure on wages”.

The confidence of building material manufacturers increased from ‘0’ in the second quarter of 2020 to ’40’ in the third quarter. Supported by rising retail demand, domestic sales of building materials grew. As with retailers, sales exceeded expectations.