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Johannesburg - Business sentiment has recovered from a 15-year low in August, helped by the resolution of labour strikes and easing consumer price pressures, a survey showed on Wednesday.
The South African Chamber of Commerce and Industry's (Sacci) business confidence index improved to 89.0 in August, from 87.9 in July.
Sacci said there were signals that business sentiment had bottomed out, but South Africa's key economic activities needed to perform strongly on a sustained basis for confidence to gather momentum.
"Sound institutions and a relative stable and predictable policy and investment environment are imperatives," Sacci said in a statement.
"Perhaps the slight uptick in Sacci's BCI could signal a change of direction."
"The BCI is moving in a narrow band around
the level of 90, with an average of 90.4 in the first eight months of
2014," Sacci said.
During the first eight months of 2013, the BCI averaged 91.4.
"There are indications that the BCI may have bottomed out, but the sub-indices reflecting key economic activities will have to perform more strongly on a continuous basis in order for improvements in business confidence to gather pace."
The sub-indices include municipal services, manufacturing, exports, imports, vehicle sales, retail sales, construction, inflation, share prices, real private sector borrowing, real financing cost, precious metal prices and the rand exchange rate.
Sacci said business confidence had to be supported by convincing signs of improvement in real economic activity and the easing of labour unrest brought the promise of normality to the economic environment.
Retreating inflationary pressures benefited the business mood while the decline in the US dollar commodity prices last month would positively affect import prices, it said.
"On a month-on-month (m/m) basis, six of the 13 sub-indices of the BCI were positive in August compared to five in July," it said.
"Important sub-indices like manufacturing output, import volumes and building activity turned from negative to positive but this must be viewed in the context of the volatility of the BCI."
Sacci said the domestic business environment calmed after the strike action in various sectors.
The economy was still struggling to gain momentum and deal with the consequences of protracted strike activity, it said.
The mining sector was the worst hit by the strike disruptions with a 2.7% year-on-year output decline followed by the steel and allied workers strike which saw manufacturing output declining by 0.6%.
"The 1.3% year-on-year average growth of the economy in the first half of 2014 has brought the prospects for growth in 2014 down to below two percent - with all the corresponding negative implications for investor and business confidence," Sacci said.
"The economy has to grow by 2.7% year-on-year in each of the remaining quarters to reach two percent growth for 2014."
Sacci said higher growth could be gained by attracting the necessary private sector interest.
South Africa's biggest problem was to accelerate the pace of economic growth, Sacci said.
- Reuters, Sapa
