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Johannesburg - Business confidence dropped by six index points in the third quarter of this year, RMB/BER reported on Tuesday.
The Rand Merchant Bank (RMB) and the Bureau for Economic Research at Stellenbosch University (BER) business confidence index decreased to 42, they said in a statement.
"After fluctuating around the neutral 50 mark for about a year now, the RMB/BER business confidence index (BCI) fell notably into net negative territory in the third quarter," RMB chief economist Ettienne Le Roux said.
"[This] indicates that close to three fifths of the respondents rated prevailing business conditions as unsatisfactory."
Business confidence fell in three of the five sectors in the third quarter.
Declines were particularly sharp in the case of new motor dealers and wholesalers, which were two volatile sectors, Le Roux said.
The new motor dealer confidence dropped from 61 index points in the second quarter to 39 in the third. This was mainly due to a slowdown in sales.
Wholesaler confidence dropped from 61 to 43 points which was mainly attributed to slower growth in profits.
"Whereas business confidence dropped by about 20 index points in each of these two sectors, it declined only marginally (by two points) in the building sector," said Le Roux.
"In contrast, confidence improved by three points in the manufacturing sector and by eight points in the retail sector."
He said building contractors saw sentiment drop by two index points to 42 in the third quarter.
Growth in building activity slipped in the residential and non-residential markets.
However, in new car dealers, wholesalers and building contractors, the business mood improved among manufacturers and retailers.
Manufacturing output picked up mainly on the back of stronger growth in domestic sales, Le Roux said.
Retailer confidence increased by eight points to 49 in the third quarter. The underlying results were not consistently positive but signalled continued growth in retail trade.
He said a noteworthy trend in the third quarter survey results was the upward pressure on purchasing prices, and to a varying degree, also in selling prices.
Le Roux pointed out that the decline in the BCI did not mean the economy was in the midst of a new cyclical downturn.
"For that to be so, underlying activity usually has to be weakening across all of the sectors, which is not the case.
"Although new vehicle sales took a knock and building activity weakened unexpectedly, manufacturing output actually picked up and retail trade continued to expand," he said.
