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Johannesburg – Business confidence as measured by the South African Chamber of Commerce and Industry (Sacci) fell in May‚ indicating a depressed business climate.
Sacci’s business confidence index (BCI) fell 1.9 index points to 90.4 in May from 92.3 in April‚ the chamber said on Tuesday.
The chamber said that the some of the index’s sub-indices were adversely influenced by recent developments in the domestic economy.
The negative impact on the business climate came mainly from causes exogenous to private business activity but which played a cardinal role in affecting business confidence‚ economic performance and financial markets‚ Sacci said.
Socio-political events‚ including on-going militant labour action‚ are having a harmful impact on the business mood and commercial and industrial activity levels while also distorting financial market performance.
The business organisation said it was disconcerting that major economic sectors that had the ability to create employment growth‚ were contracting while others were experiencing exceptional cost pressures resulting from rising labour costs and intermediary inputs such as fuel‚ electricity and water prices that were increasing faster than the general price level as measured by inflation.
“The decline in the Sacci BCI in May shows that non-economic factors can have a damaging impact on the economy and on the business climate‚” Sacci economist Richard Downing said.
“Ill-disciplined and lawless conduct by economic role players leads to undesirable effects on growth‚ the rand and unemployment‚ which could have been avoided.”
The annual change in the BCI sub-indices were slightly more encouraging in May 2013 than in April as seven of the 13 sub-indices improved year-on-year while in April 2013 only three sub-indices were positive and one neutral.
Although there were three financial sub-indices in May 2013 that were positive on a year ago compared to one in April 2013‚ important financial sub-indices like the weighted rand exchange rate‚ inflation and US dollar precious metal prices impacted strongly on an uncertain financial environment beset by various cost-push factors.
Sacci said that to raise business confidence above its current vulnerable levels‚ it was essential that economic role players urgently rally around a “common vision” of sound business values and economic progress.
