Business confidence index

2012 ended on a low note

Municipal services, import volumes and retail sales made negative contributions to the business confidence index.
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The South African Chamber of Commerce and Industry (SACCI) released its business confidence index (BCI) for December at its offices in Rosebank, Johannesburg on 9 January.

The BCI improved from 91.7 points in November to 93 in December, but it is still not at a convincing level for investors.

The BCI was 6.1 points below its December 2011 level, but remains better than the substantial 8.5 year-to-year difference in March 2012.

Although the December figure improved slightly, the fourth quarter of last year was the poorest performing quarter of the year. 

Although the pace of decline in business confidence moderated during the year, the level at the end of last year was still unacceptably low.

Given that 2010 is the current BCI base year (at 100 points), the deterioration to an average of 94.1 for last year after averaging 119 in 2006 gives an indication of the extent of erosion of local business confidence in recent years.

Positive contributions to business confidence on both a monthly (m/m) and an annual (y/y) basis came from manufacturing and construction activity, while all the financial sub-indices had a positive impact with the exception of the rand exchange rate.

The rand was positive on a monthly basis, but negative on an annual basis – contrasting with new vehicle sales that were negative on a monthly basis, but positive on an annual basis.

Municipal services, import volumes and retail sales made negative contributions to the BCI on both a m/m and y/y basis. 

There were signs of a possible recovery in certain real activities toward the end of 2012. Exports volumes, real credit extension, new vehicle sales, manufacturing output and building plans passed all improved on levels of a year ago. 

The promise of improvements in confidence will only realise if the threats of continued labour protest activity, already revealed in the early days of 2013, are dealt with decisively. 

The first step toward a more conducive business environment in 2013 is for the socio-economic partnership between the government, business and labour to urgently realise a commonality of approach in responding to South Africa’s current socio-economic crisis.

SACCI believes that there should be clear policy resolutions to support improved economic performance and a conducive business environment as the solution to the socio-economic challenges South Africa faces.

Read a full background to this month’s SACCI BCI  and to see the economic commentary in the BCI report.

 

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