Business climate stabilises
Monthly confidence index at 95.5 points
THE SOUTH African Chamber of Commerce and Industry’s (Sacci) monthly business confidence index (BCI) fell to 95.5 points in February from 97.7 points in January, pointing towards the stabilisation of the business climate in South Africa.
“The negative effects came from notable lower merchandise import and export volumes, and less new vehicle and real retail sales,” Sacci said. It said slower inflation, higher commodity prices and a slightly stronger rand made positive contributions to the index.
South Africa’s economy is struggling to attract investment, with sentiment dimmed by weak growth that has hit consumer activity and the looming threat of credit downgrades to junk.
The country’s economy contracted 0.3 percent quarter-on-quarter in the final three months of last year, as mining and manufacturing output shrank, the statistics agency said.
The rand weakened yesterday, while emerging currencies strengthened supported by a steady commodities outlook while investors held back on any major bets ahead of a US employment report later in the week. The survey said the stronger rand exchange rate again made the largest positive year-onyear contribution to the BCI, followed by lower inflation and higher gold and platinum prices.
“Substantially less merchandise import volumes than a year ago made a particular negative contribution. Higher real finance, increased energy costs (crude oil and electricity), and lower share prices on the JSE further weighed on business confidence.”
Sacci said important incidents that occurred during the month of February could have a bearing on the economy over the medium and longer-term.
“Among the important developments is the announcement of the national minimum wage, Budget 2017, increasing commodity prices, including crude oil, a stronger exchange rate, and the preserving of the internationally acclaimed financial system.”
The dollar was on the back foot as a recent rally lost steam with a March rate increase by the Federal Reserve seemingly already priced in and attention The stronger rand exchange rate again made the largest positive year-on-year contribution to the BCI.
on upcoming growth.
Sacci said, on an annual basis, the business climate had improved slightly in February in anticipation that positive developments would eventually outpace a negative sentiment in the economy.
“All indications are that economic growth will pick up as the implementation and prudent authority take hold. The business climate could further
be improved if the constructive developments could be augmented. Business and investor confidence depend on whether this window of opportunity will be seized.”
Sacci said the recovery of the BCI over the past five months pointed towards the stabilisation of the business climate in South Africa caused by changing local and global and political approaches.