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Business confidence slips in May

Johannesburg - South Africa’s business confidence index (BCI) fell to 85.8 points in May from 86.9 in April, the South African Chamber of Commerce and Industry (Sacci) said on Wednesday.

This is the lowest point since July 2010 and the lowest level so far in 2011. Sacci said an anticipated increase in the index failed to gain momentum, and there was now the prospect of the index falling further.

The Sacci index is the second this week to indicate a drop in confidence. On Tuesday the Rand Merchant Bank/Bureau for Economic Research index also showed a sharp dive.

Export volumes recorded the biggest negative followed by import volumes, new vehicle sales and retail sales. The rand exchange rate, share prices and inflation in the financial component of the BCI also made a negative contribution to business confidence.

The outlook for manufacturing activity was positive. 

Sacci noted that two significant events took place in May: approval for the Walmart transaction and local government elections.

"Both these will have significant consequences for the perceived ease of doing business and business confidence levels in South Africa," Sacci said.

However, it said it was concerned about the undertone at the Competition Tribunal hearings on the Walmart deal and its effect on business and investor confidence.

"Given our need for foreign direct investment, Sacci welcomes the acceptance of the transaction, albeit with preconditions."

Sacci added that it would closely monitor progress after the elections, as service delivery to business was an important contributor to business confidence.
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