Slight decline in business confidence

BUSINESS confidence eased marginally in February from a two-and-a-half-year high in January but showed a marked improvement when compared to the same period last year.

The South African Chamber of Commerce and Industry (Sacci) Business Confidence Index (BCI) released yesterday showed that the sentiment pulled back 0.8 points to 98.9 in February after recording 99.7 in January.

The index was, however, 3.4 points higher than the 95.5 recorded in February last year but lower than the 103.2 recorded in February 2015.

Sacci economist Richard Downing said greater economic policy consistency and predictability could add to a further strengthening in the confidence levels.

“The lower inflation and the stronger rand exchange rate, together with a Budget indicating government’s resolve to turn back from the fiscal cliff, could accommodate an easier monetary policy stance that should further enhance the economic performance over the medium term,” Downing said.

The surge in the sentiment in February was the result of 11 of 13 sub-indices that were either improved or being unchanged year-on-year. Six of the sub-indices declined while seven remained positive or unchanged on January levels.

February’s BCI came in the week that Finance Minister Nhlanhla Nene commented that the government’s GDP growth projections would probably be raised with the tabling of the medium-term budget policy statement in October this year.

Nene said the country would reap dividends from planned growth-boosting reforms and the stabilisation of state-owned enterprises.

Ian Cruickshanks, the chief economist at the SA Institute of Race Relations, said investors needed to see sustained economic recovery and consistent economic policy before confident races ahead.