Pressure on firms might be easing, survey finds

One in four businesses say operations at full capacity in level 4 – Stats SA

A FEW green shoots of economic revival have appeared, according to the latest survey by Statistics SA on the impact of the Covid-19 pandemic among businesses.

Stats SA data shows pressure on businesses might be easing during the lockdown, as the percentage of firms returning to work rose from 5.7% under level 5 to 13% under level 4.

However, the authors of the monthly survey, which garners economic insight on the impact of the lockdown, said although it was cause for cautious optimism, other indicators showed continued tough trading conditions for businesses.

“During the final two weeks of level 5 of the lockdown, almost half of the businesses responding to our impact survey indicated that they had temporarily ceased trading.

“During level 4, this fell to onefifth, according to a follow-up survey,” said Stats SA.

“Other indicators from the level 4 survey show a similar pattern as the economy returns to full functionality.

“Only 9% of businesses were operating at full capacity during level 5.

“This increased to just over one in four (26%) during level 4.

“Access to materials and goods also eased, with 27% of firms able to get the materials, goods and services they needed while under level 4, rising from 10% under level 5.

“In terms of employment, 36% of firms indicated that they had laid off staff in the short term under level 5, reducing to 26% under level 4.”

Meanwhile, against the backdrop of rising Covid-19 infections, job losses and pay cuts, and a negative wealth shock via housing and financial markets, the Consumer Confidence Index (CCI), compiled by the Bureau for Economic Research (BER), fell notably in Q2 to -33 index points from -9 in Q1.

“The BER CCI collapsed to a 35-year low. All the three component indices weakened, but to startlingly different degrees,” said Absa economist Peter Worthington.

“The survey was conducted between June 1 and 12, a period when much more economic activity was permitted under level 3 of the lockdown. We believe if the survey had been conducted earlier in Q2 during either level 5 or 4 of lockdown restrictions, the CCI might have come in even lower.”

Bianca Botes, executive director at Peregrine Treasury Solutions, said the fall in consumer confidence was an indication that consumers were under pressure from the economic slowdown that started pre-pandemic.

“Except now the effects of the pandemic are also beginning to take their toll, with many consumers not knowing whether they will be able to sustain their income and whether the companies they work for will be able to sustain their revenue flows.”

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Effects of the pandemic are beginning to take their toll on consumers Bianca Botes PEREGRINE TREASURY SOLUTIONS