The industry dashboard july 2012

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The industry dashboard july 2012

  1. 1. Studium Ad Prosperandum •• BUILDING RESEARCH BUILDING RESEARCH BMI BMI STRATEGY CONSULTING STRATEGY CONSULTING UNIT cc UNIT cc Voluntas in Conveniendum Reg. No. 2002/105109/23 THE INDUSTRY DASHBOARD: JULY 2012: BPP AND BC (MAY 2012), CEMENT (MARCH 2012) AND LUMBER SALES (JUNE 2012). DOMESTIC CEMENT SALES (TONNES) ENDED 2011 AT +3,35% COMPARED TO 2010 Cumulative Y/Y January 2012 for Domestic Cement Sales recorded an increase of + 21,69% compared to 2011, followed by Cumulative Y/Y increase of +13,74% in February and +6,71% in March thus a good start to 2012. The MAT Forecast for Domestic Cement Sales shows marginal growth of + 1,48% for 2012 vs 2011. Domestic Cement Sales: Cumulative YTD March 2012 vs 2011 and 2010 (Source: Cement & Concrete Institute; BMI-BRSCU Workings) 12 000 000 21% ACTUAL MAT FORECAST 10 000 000 Cumulitive % Change: YTD 2011 vs 2010 16% 8 000 000 Tonnes 6 000 000 11% Publication of Cement Statistics stopped on 3 4 000 000 April 2012 by Competition Commission. Quarterly Statistics, delayed by 3 months will be published in future. 6% 2 000 000 0 1% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Cum YTD sales: 2011 638 749 1 462 683 2 471 585 3 287 922 4 200 506 5 197 006 6 170 010 7 184 949 8 289 826 9 345 495 10 486 74311 234 427 Cum YTD sales 2012 & MAT Forecast 779 003 1 663 703 2 637 349 3 453 686 4 366 270 5 362 770 6 335 774 7 350 713 8 455 590 9 511 259 10 652 50711 400 191 % Change Cum YTD 2012 VS 2011 21.96% 13.74% 6.71% 5.04% 3.95% 3.19% 2.69% 2.31% 2.00% 1.77% 1.58% 1.48% The Building and Construction Industry is still suffering from a lack of timeous and comprehensive information. Unfortunately the Competition Commission decided to ban the publication of cement statistics which was the best source of information. The major cement manufacturers have admitted to collusion and have been fined, but the Building and Construction Industry will be punished in perpetuity through the banning of strategically important information. We have applied to StatsSA to take over the publication of cement statistics, but have had no acknowledgement from them. We will continue to pursue other avenues to get information. As Supreme Court Justice Louis D Brandis once wrote, “Sunlight is said to be the best of disinfectants.” Levitt and Dubner (Freakonomics: 2009) conclude that information is a beacon, a cudgel, an olive branch, a deterrent, depending on who wields it and how. Information is so powerful that the assumption of information, even if it does not actually exist, can have a sobering effect. BMI-BRSCU INDUSTRY Dashboard: AprilJULY 2012 BMI-BRSCU Industry DASHBOARD 2012BMi BMi 1
  2. 2. LOCAL BUILDING LUMBER SALES (M3) ENDED 2011 AT +14,6% COMPARED TO 2010. Cumulative Y/Y January 2012 recorded a decrease of - 4,10% compared to 2011, followed by an increase of + 1,60% in February 2012, + 5,24% in March, + 5,98% in April, + 5,87% in May and + 3,29% in June. Although it is early in the New Year, it does appear as if Lumber Sales is running out of steam compared to the buoyant growth in 2011. The MAT Forecast for Local Building Lumber Sales (in m3) shows an outlook of + 1,59% for 2012 vs 2011. Lumber Sales by End-use: Local Building: Cum Y/Y 2012 vs 2011 (June) (Source: Crickmay & Associates, BMI-BRSCU Workings) 1 200 000 8% MAT FORECAST % Change Cum Y/Y Local Building: 2012 vs 2011 6% 1 000 000 4% 800 000 Cubic Metres 2% 600 000 0% 400 000 -2% 200 000 -4% - -6% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2011 Cum Y/Y Local Building 83 590 174 204 265 674 345 749 437 896 537 281 628 339 729 731 837 356 933 839 1 036 3 1 109 9 2012 Cum Y/Y Local Building 80 164 176 989 279 604 366 414 463 621 554 962 646 020 747 412 855 037 951 520 1 054 0 1 127 6 % Change Cum Y/Y Local Building: 2012 vs 2011 -4.10% 1.60% 5.24% 5.98% 5.87% 3.29% 2.81% 2.42% 2.11% 1.89% 1.71% 1.59% TOTAL BUILDING PLANS PASSED (M2) ENDED 2011 AT – 0,83% COMPARED TO 2010. CUMULATIVE Y/Y building plans passed (BPP) by larger municipalities (in m2) for YTD May 2012 decreased by – 2,40% compared with May 2011. • Additions and Alterations BPP decreased (- 4,66%), • Residential BPP decreased (– 3,68%), • Non-Residential BPP increased (+ 3,74%). Longer term trends in BPP reflect a flat future. The MAT Forecast for Residential BPP (in m2) shows marginal decline of – 1,38%, Non Residential BPP shows marginal growth of + 0,08% and Total BPP shows decline of – 0,93% for 2012 vs 2011. RES BUILDING PLANS PASSED (BPP): SOUTH AFRICA: MAT* 2012 VS 2011 (MAY) m2 R*1000 Dwelling-house < 80 square metres -48 422 -4.44% 179 369 6.51% Dwelling-house => 80 square metres -2 650 -0.07% 682 896 3.62% Flats and townhouses -21 256 -1.52% 174 400 2.44% Other buildings -19 910 -21.33% -76 313 -17.15% Additions and alterations -39 072 -1.24% 238 685 1.58% TOTAL -131 310 -1.38% 1 199 037 2.70% BMI-BRSCU INDUSTRY Dashboard: AprilJULY 2012 BMI-BRSCU Industry DASHBOARD 2012BMi BMi 2
  3. 3. NON RES BUILDING PLANS PASSED (BPP): SOUTH AFRICA: MAT* 2012 VS 2011 (MAY) m2 R*1000 Office and banking -45 536 -8.07% -397 293 -10.58% Shopping -1 817 -0.28% -240 854 -6.55% Industrial and warehouse 137 850 9.48% 626 707 10.57% Other buildings -47 705 -9.77% -234 642 -8.89% Additions and alterations -39 277 -3.57% -5 409 -0.09% TOTAL 3 515 0.08% -251 491 -1.13% TOTAL -127 795 -0.93% 947 546 1.42% * May 2012 TOTAL BUILDINGS COMPLETED (M2) ENDED 2011 AT – 7,50% COMPARED TO 2010. CUMULATIVE Y/Y buildings reported as completed (BC) to larger municipalities (in m2) for YTD May 2012 increased by + 2,09% compared with May 2011. • Non residential BC increase (+ 26,11%), • Residential BC increase (+ 1,77%) and • Additions and Alterations BC decreased (- 16,73%). After these first 4 months results it is our view that the decline in Private Residential and Non Residential BC has been arrested and will show moderate growth in 2012. The MAT Forecast for Residential BC shows marginal decline of – 1,53%, Non Residential BC shows increase of + 6,63% and Total BC shows growth of + 0,84% for 2012 vs 2011. RES TOTAL (INCL A&A): BC: CUM ACTUAL 2011 VS MAT FC 2012 BY MONTH: (M2) (MAY) (Source: StatsSA, BMI-BRSCU Workings) 7 000 000 9% CUM ACTUAL 8% MAT FORECAST 7% 6 000 000 % Difference: Cum Actual 2011 vs Forecast 2012 6% 5% 5 000 000 4% 3% Square Metres (m2) 4 000 000 2% 1% 3 000 000 0% -1% -2% 2 000 000 -3% -4% 1 000 000 -5% -6% 0 -7% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Res Total: Cum MAT Forecast 2012: m2 407 773 903 465 1 486 183 1 959 757 2 482 911 3 101 847 3 664 073 4 170 068 4 790 242 5 365 954 5 960 497 6 487 510 Res Total: Cum Actual 2011: m2 379 294 904 887 1 582 137 2 059 999 2 583 797 3 202 733 3 764 959 4 270 954 4 891 128 5 466 840 6 061 383 6 588 396 Res Total: Cum MAT FC 2012 vs 2011: % 7.51% -0.16% -6.06% -4.87% -3.90% -3.15% -2.68% -2.36% -2.06% -1.85% -1.66% -1.53% BMI-BRSCU INDUSTRY Dashboard: AprilJULY 2012 BMI-BRSCU Industry DASHBOARD 2012BMi BMi 3
  4. 4. NON RES TOTAL (INCL A&A): BC: CUM ACTUAL 2011 VERSUS MAT FC 2012 BY MONTH: TOTAL RSA (APRIL) (Source: StatsSA, BMI-BRSCU Workings) 3 000 000 33% 2 800 000 CUM ACTUAL MAT FORECAST 2 600 000 28% % Difference: Cum Actual 2011 vs Forecast 2012 2 400 000 2 200 000 23% 2 000 000 18% Square Metres (m2) 1 800 000 1 600 000 13% 1 400 000 8% 1 200 000 1 000 000 3% 800 000 600 000 -2% 400 000 -7% 200 000 0 -12% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec NR Total: Cum MAT FC 2012: m2 191 336 431 549 643 784 994 828 1 301 855 1 578 509 1 786 303 1 941 116 2 136 248 2 392 946 2 679 457 2 868 760 NR Total: Cum Actual 2011: m2 146 339 377 453 657 760 893 943 1 123 484 1 400 138 1 607 932 1 762 745 1 957 877 2 214 575 2 501 086 2 690 389 NR Total: Cum MAT FC 2012 vs 2011: % 30.75% 14.33% -2.12% 11.29% 15.88% 12.74% 11.09% 10.12% 9.11% 8.05% 7.13% 6.63% RES & NON RES TOTAL (INCL A&A): BC: CUM ACTUAL 2011 VERSUS MAT FC 2012 BY MONTH: (M2) (MAY) (Source: StatsSA, BMI-BRSCU Workings) 45 000 000 14% 13% CUM ACTUAL MAT FORECAST 12% 40 000 000 % Difference: Cum Actual 2011 vs Forecast 2012 11% 35 000 000 10% 9% 8% 30 000 000 SQUARE METRES 7% 6% 25 000 000 5% 4% 20 000 000 3% 2% 15 000 000 1% 0% 10 000 000 -1% -2% 5 000 000 -3% -4% 0 -5% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Res & NR Total: Cum MAT FC 2012: M2 599 109 1 335 01 2 129 96 2 954 58 3 784 76 4 680 35 5 450 37 6 111 18 6 926 49 7 758 90 8 639 95 9 356 27 Res & NR Total: Cum Actual 2011: M2 525 633 1 282 34 2 239 89 2 953 94 3 707 28 4 602 87 5 372 89 6 033 69 6 849 00 7 681 41 8 562 46 9 278 78 Res & NR Total: % Difference Cum Actual 2011 vs FC 13.98% 4.11% -4.91% 0.02% 2.09% 1.68% 1.44% 1.28% 1.13% 1.01% 0.90% 0.84% 2012: M2 SUMMARY Cumulative YTD Buildings Completed (BC), Domestic Cement Sales and Local Building Lumber Sales: % Change by Sector: January - Dec 2012 (Source: StatsSA; BMI-BRSCU Workings) 35% 30% CUM ACTUAL MAT FORECAST 25% Percentage 20% 15% 10% Publication of Cement Statistics 5% stopped on 3 April 2012 by Competition Commission. 0% Quarterly Statistics, delayed by 3 months will be published in -5% future. -10% Jan- Feb Mar Apr- May Jun- Jul- Aug Sep Oct- Nov Dec 12 -12 -12 12 -12 12 12 -12 -12 12 -12 -12 Total Res BC Cum YTD % Change (m2) 7.51% -0.16% -6.06% -4.87% -3.90% -3.15% -2.68% -2.36% -2.06% -1.85% -1.66% -1.53% Total Non Res BC Cum YTD % Change (m2) 30.75% 14.33% -2.12% 11.29% 15.88% 12.74% 11.09% 10.12% 9.11% 8.05% 7.13% 6.63% Total BC Cum YTD % Change (m2) 13.98% 4.11% -4.91% 0.02% 2.09% 1.68% 1.44% 1.28% 1.13% 1.01% 0.90% 0.84% Domestic Cement Sales (Tonnes) 21.96% 13.74% 6.71% 5.04% 3.95% 3.19% 2.69% 2.31% 2.00% 1.77% 1.58% 1.48% Local Building Lumber Sales (m3) -4.10% 1.60% 5.24% 5.98% 5.87% 3.29% 2.81% 2.42% 2.11% 1.89% 1.71% 1.59% BMI-BRSCU INDUSTRY Dashboard: AprilJULY 2012 BMI-BRSCU Industry DASHBOARD 2012BMi BMi 4
  5. 5. From the foregoing comparisons it can be seen that ALL the indicators indicate a turning point and the MAT Forecasts display an interesting pattern. Only Residential BC shows a decline albeit only – 1,53%. Contrary to conventional wisdom, Non Residential BC shows the biggest increase of + 6,63%. Conditions for High Road Scenario Domestic Cement Sales shows an Investor Confidence: • High confidence; increase of 1,48% and Local Building • Risk taking propensity Lumber Sales shows an increase • GDP growth > 6% pa; CPI in 3-6% range; 1,59%. • • Real Interest Rates < 5%; Investment Climate: It still remains to be seen whether • Property a preferred investment; • FTHB Subsidies increased to 2,5-5% of Budget; the gradual improvement in BPP and • The non residential market grows in tandem with BC from the levels achieved in 2010 residential; will be encouraged by the increasing • Home improvement and non residential refurbishment markets grow at > 10% pa; willingness of the Banks to relax their • Private Sector Investment as a percentage of Total stringent lending criteria so that Investment in Building 50-60%; Property Delivery: Mortgage Advances can flow into the • Building growth 2010-2020 at > 6,5% pa; industry, and that the Government • The R1,5 Trillion Affordable Housing programme commitment on Infrastructure and successfully implemented; • Backlogs eliminated by 2020; Building Investment materialises. • Construction growth 2108-2020 at > 7,5% pa; It is a fact that without credit the • The R846 Billion Government Infrastructure building industry and the property programme is successfully implemented market will founder, and if building does not recover, the economy will not recover. According to Michael Spence, winner of the Nobel Prize in Economics (The next convergence: 2011), there is a rule used by statisticians and economists called the rule of 72. It says that the time it takes to double in size at a specific annual growth rate is that growth rate divided into the number 72. So for example, at 1% growth rate, income (or whatever it is that is growing) doubles in 72 years. At 7% growth, incomes and output double every 10 years. Without growth in the region of 7% pa the equity gap will not be closed for several decades. At 3% growth in GDP annually it will take 24 years to close the wage gap in South Africa. No matter how much is spoken about the necessity of closing of the wage gap, and the efforts at redistribution and social grants, it is only through sustained growth following substantial domestic and foreign investment in infrastructure and property, that the employment and growth will follow. It is simply not feasible to keep on increasing the tax burden of the employed and to redistribute to the poor in the forlorn hope that the gap will be closed. As Michael Spence says, notwithstanding the recent sustained high growth in an increasing part of the developing world, it takes decades for countries to make the transition from poor to advanced status. The poorest countries have incomes of about $300 to $500 per person. Advanced countries have incomes of $20 000 and above. To go from poor to the lower ranges of advanced, incomes have to double 5 times and then some. Therefore it has to be accepted that it could take South Africa 20 to 30 years to get to the lower ranges of advanced country status. Dr.Llewellyn B Lewis, Principal Consultant, BMI Building Research Strategy Consulting Unit cc, Trwstllewellyn Cottage, 9 Adrienne Street, Strathavon, Sandton, PO Box 784133, Sandton 2146. research@bmi-brscu.co.za www.strategicforum.co.za Tel: (011) 884 2075, Cell 082 884 0063, Fax 086 6472 494 July 2012 BMI-BRSCU INDUSTRY Dashboard: AprilJULY 2012 BMI-BRSCU Industry DASHBOARD 2012BMi BMi 5

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