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Johannesburg - Companies that are optimistic about prevailing business conditions in SA are now in the majority, against those that are pessimistic.
The latest Rand Merchant Bank (RMB)/Bureau for Economic Research Business (BER) Confidence Index released on Tuesday rose by 11 points to 55 during the first quarter of 2011.
A reading above 50 indicates optimism, as opposed to pessimism if the index level falls below 50.
RMB said the last time the index was at these levels was three years ago.
The rise in confidence implies that growth momentum is spreading - with the exception of the building sector - to more industries than trade sectors, only said RMB chief economist Ettienne le Roux.
"The sharp increase in the BCI (Business Confidence Index) signals that strong GDP (gross domestic product) growth was probably sustained during the beginning months of 2011," Le Roux said.
Le Roux said the rise in the BCI was also a good sign for capital expenditure.
Business confidence increased in three of the five sectors that made up the BCI, namely motor trade, wholesale trade and manufacturing.
Confidence in the retail and building sectors declined.
Motor trade rebounded strongly to 84 in the first quarter of 2011, its highest level in five years.
Wholesale confidence surged to 65 index points after it fluctuated around the neutral level of 50 throughout the whole of 2010.
Confidence in manufacturing registered another big increase of 10 index points to 51.
Other than higher sales volumes, which boosted confidence in the three sectors, they also benefited from an apparent improvement in pricing power and a related profitability increase.
The retail sector confidence retracted slightly, but remained at a higher level of 58.
Building remained the only sector in which there was still virtually no sign of a recovery, RMB/BER reported.
Confidence in this sector edged lower to 18 from 20 in the fourth quarter of 2010, which brought the index to its lowest level in more than 10 years.
RMB/BER said it was worth mentioning that, viewed from a long-term perspective, business confidence had been lower during previous down cycles.
"Moreover, building cycles are long term in nature and typically lag those of other sectors in the economy," RMB analysts said.
The latest Rand Merchant Bank (RMB)/Bureau for Economic Research Business (BER) Confidence Index released on Tuesday rose by 11 points to 55 during the first quarter of 2011.
A reading above 50 indicates optimism, as opposed to pessimism if the index level falls below 50.
RMB said the last time the index was at these levels was three years ago.
The rise in confidence implies that growth momentum is spreading - with the exception of the building sector - to more industries than trade sectors, only said RMB chief economist Ettienne le Roux.
"The sharp increase in the BCI (Business Confidence Index) signals that strong GDP (gross domestic product) growth was probably sustained during the beginning months of 2011," Le Roux said.
Le Roux said the rise in the BCI was also a good sign for capital expenditure.
Business confidence increased in three of the five sectors that made up the BCI, namely motor trade, wholesale trade and manufacturing.
Confidence in the retail and building sectors declined.
Motor trade rebounded strongly to 84 in the first quarter of 2011, its highest level in five years.
Wholesale confidence surged to 65 index points after it fluctuated around the neutral level of 50 throughout the whole of 2010.
Confidence in manufacturing registered another big increase of 10 index points to 51.
Other than higher sales volumes, which boosted confidence in the three sectors, they also benefited from an apparent improvement in pricing power and a related profitability increase.
The retail sector confidence retracted slightly, but remained at a higher level of 58.
Building remained the only sector in which there was still virtually no sign of a recovery, RMB/BER reported.
Confidence in this sector edged lower to 18 from 20 in the fourth quarter of 2010, which brought the index to its lowest level in more than 10 years.
RMB/BER said it was worth mentioning that, viewed from a long-term perspective, business confidence had been lower during previous down cycles.
"Moreover, building cycles are long term in nature and typically lag those of other sectors in the economy," RMB analysts said.
