ABSTRACT
A leading indicator for the South African building industry was developed by the author and presented to the CIRET conference in Singapore in September 1995. This composite index, called the MFA Qualitative Leading Indicator, is based on 33 survey indicators published on a quarterly basis by the Bureau for Economic Research (BER), University of Stellenbosch. The BER follows the Konjunkturtest methodology pioneered by the IFOInstitute, Munich, Germany. These 33 indicators were weighted according to the scoring system of the National Bureau of Economic Research, USA. During 1994 the new South African government published a policy framework entitled The Reconstruction and Development Programme (RDP)\ In this social upliftment programme subsidy funds would be allocated from the national budget for mass housing schemes. One million low-income housing units were to be built within five years. Whereas one would have expected great optimism, the qualitative leading
indicator for the South African building industry shows that survey respondents are generally pessimistic about future business conditions. Furthermore, quantitative building investment data compiled by the South African Reserve Bank (SARB) are declining. When the movements in the MFA indicator are superimposed on the official Reserve Bank data it is evident that the survey data leads changes in the level of building activity. The analysis has certain policy implications which are discussed in this paper.
