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Johannesburg - The Rand Merchant Bank/Bureau for Economic
Research (RMB/BER) Business Confidence Index (BCI) dropped by seven index
points from 55 in the first quarter to 48 in the second quarter of 2011, it
said on Tuesday.
An index level below the neutral 50 mark means that around
half of the respondents surveyed are satisfied and the other half dissatisfied
with prevailing business conditions. Despite the second-quarter decline,
business confidence remains at a higher level than during the second half of
last year.
Confidence was down in three of the five sectors making up
the RMB/BER BCI. These were retail, wholesale and motor trade. In contrast,
confidence remained unchanged in the manufacturing sector while it increased
slightly in the building sector.
"Lower confidence in the trade sectors can mainly be
attributed to some weakening in households' ability to spend," the BER/RMB
team said.
It also said that growing fears of a prospective interest
rate hike are starting to somewhat dampen the business mood.
Fewer trading days in April could have also affected
sentiment.
The index showed that for the first time since 2007, the
level of confidence in the manufacturing sector is above that of the retail
sector.
"Manufacturers geared towards the domestic market
remain more upbeat than those focused on exports (foreign sales remained
depressed)," it said.
Confidence may have been higher among manufacturers if they
were able to pass on certain higher costs (such as electricity) to buyers, said
the RMB/BER team.
Building confidence increased by 3 index points to a level
of 21 in the second quarter, which for the first time in more than a year
indicated that building activity increased compared with the previous quarter.
