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Johannesburg - South Africa's business confidence fell to a new all-time low in May hurt by poor performances in sectors such as manufacturing and retail, a survey showed on Tuesday.
The South African Chamber of Commerce and Industry's (SACCI) Business Confidence Index (BCI) fell to 79.3 in May from 82.5 the previous month.This was 7.6 index points lower than a year before and the worst index level since June 1993, according to Bloomberg.
The index had slipped to 79.6 in December after President Jacob Zuma changed finance ministers twice within a week.
"The BCI suffered a setback as the gradual recovery to April 2016 from a historic low level of 79.6 in December 2015 was undone in May 2016," SACCI said in a statement.
"Seasonally adjusted merchandise import volumes had the largest negative month-on-month effect in May 2016 followed by real retail sales and a weaker weighted rand exchange rate against the US dollar, euro and the British pound."
SACCI said possible downgrades to South Africa's credit rating posed a risk to business confidence. It said the government should focus on measures that promote the production side of the economy.
RMB index says business confidence at 7-year low
Another survey released on Tuesday echoed this sentiment.
The Rand Merchant Bank (RMB) index said South Africa's business confidence slipped to a seven-year low in the second quarter of this year as two thirds of businesses surveyed reported dissatisfaction with a fall in sales volumes for retailers.
Rising inflation due to severe drought and a weakening currency have triggered a rise in lending rates over the past two years, strangling sentiment among businesses and consumers in Africa's most industrialised economy.
The RMB index, which is compiled by the Bureau for Economic Research, fell to 32 from 36 in the previous quarter, with confidence among retailers falling to a level worse than that seen during the 2008/9 global financial crisis.
There was also a sharp deterioration in sentiment in the building and wholesale trade sectors, while the mood among manufacturers and new vehicle dealers was slightly improved.
"In fact, the economy might well have contracted," RMB said in a statement.
"The collapse in retailers' confidence, combined with the continued declines in the sales volumes of new vehicles as well as consumer goods at the wholesale level, suggest as much."
South Africa has dodged downgrades from S&P Global Ratings and Moody's, but analysts say a downgrade could be on the cards in December if policy measures failed to revamp an ailing economy.
Ratings agency Fitch is expected to publish its review on South Africa on Wednesday, the Treasury said. Fitch has not said when it will publish its review.
