Data from the SA Chamber of Commerce and Industry (Sacci) released yesterday showed that its business confidence index (BCI) rose to 93 points in September from 89.6 points in the previous month, which was the lowest since 1985, but the slow-growing economy continued to constrain business activity.
Sacci chief executive Alan Mukoki said yesterday that the higher merchandise import and export volumes made notable contributions to the monthly improvement of the BCI last month.
“The South African economy is experiencing a myriad of challenges. Although some matters like inflation, monetary policy and certain balance of payments aggregates reflect easier circumstances, aspects like slow economic growth, shortage of capital formation and restrained public finances need a strong resolve to succeed and create the necessary business and investor confidence,” Mukoki said.
Sacci’s BCI also improved on last year’s September level by 2.7 points. This is the largest month-on-month recovery for the BCI this year, except for January. Last month, the Rand Merchant Bank (RMB)/Bureau Economic Research (BER) Business BCI showed that business confidence in South Africa saw a marginal increase in the third quarter of the year, but still remained in subdued territory with seven out of the 10 respondents having remained dissatisfied with business conditions in the country.
The RMB/BER BCI rose by 6 points to 34 points after plunging from 40 to 29 points in the second quarter - its lowest level since the 2009 financial crisis. Seven of the 13 sub-indices of the Sacci BCI reflected positive month-on-month movements in the business climate between August and September.
However, two sub-indicators had a negative impact and four did not change month-on-month. Two positive sub-indices were from the financial environment and five of the seven real economic sub-indices had a positive month-on-month impact on business confidence in September.
Chief economist at the Institute of Race Relations, Ian Cruickshanks, yesterday said that business conditions were improving, albeit at a low level.
“Business confidence is still low, but levelling out. Maybe the levelling out is taking place before we see a marked improvement in confidence. All in all, there are some positive signs,” Cruickshanks said.
According to macroeconomics website Trading Economics coincident index in South Africa averaged 109.49 index points from 1985 until 2017, with a record low of 88.12 index points in April 1985 and reaching an all-time high of 141.17 index points in December 2006.
Last week, Alastair Macduff, chairperson and chief executive of the Turnaround Management Association Southern Africa said business confidence in South Africa was at an all-time low as a result of political uncertainty, poor economic performance, policy confusion and a general lack of leadership.
Richard Downing, an economist at Sacci said yesterday that it concerned Sacci that real gross fixed capital formation declined in the second quarter of this year and that fixed investment by the private sector continued its downward trend as the investment in transport equipment and in residential and non-residential buildings diminished. “Aspects like slow economic growth, shortage of capital formation and restrained public finances, need a collective strong resolve to succeed,” Downing said.