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Business confidence picks up

Jan 09 2013 11:59 Sapa

Positive contributions to business confidence came from manufacturing and construction activity, while all the financial sub-indices had a positive impact with the exception of the rand exchange rate. (AP)

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Johannesburg - Business confidence improved in December as the economy began showing signs of recovery, the SA Chamber of Commerce and Industry (Sacci) said on Wednesday.

Sacci's Business Confidence Index (BCI) improved from 91.7 points in November 2012 to 93 in December 2012.

Sacci economist Richard Downing said that while there was some improvement, business confidence was still not at a convincing level for investors.

The BCI was 6.1 points below its December 2011 level, but remained better than the substantial 8.5 year-on-year difference in March 2012.

"Although the December 2012 figure improved slightly, the fourth quarter of 2012 was the poorest performing quarter of the year," he said.

The BCI gauges the business community's mood in response to economic conditions. It uses 13 sub-indices which include manufacturing, exports, imports, vehicle sales, construction, share prices, inflation, and the rand exchange rate.

The pace of decline in business confidence moderated during the year and the level at the end of 2012 was still unacceptably low, Downing said.

"Given that 2010 is the current BCI base year [at 100 points], the deterioration to an average of 94.1 for 2012, after averaging 119 in 2006, gives an indication of the extent of erosion of local business confidence in recent years."

Positive contributions to business confidence came from manufacturing and construction activity, while all the financial sub-indices had a positive impact with the exception of the rand exchange rate.

The rand was positive on a monthly basis, but negative on an annual basis.

Municipal services, import volumes and retail sales made negative contributions to the BCI on both a monthly and an annual basis.

"There were signs of a possible recovery in certain real activities towards the end of 2012.

"Export volumes, real credit extension, new vehicle sales, manufacturing output and building plans passed all improved on levels of a year ago," he said.

Downing said improvements in business confidence would be realised only if there was decisive action on threats of continued labour protests.

He said the country's socio-economic problems could be resolved with clear policy resolutions to support improved economic performance and a conducive business environment.

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business confidence  |  economy  |  sacci



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