Mood is stable
Lower turning point may be in sight
ECONOMIC INDICATORS are still painting a miserable picture of South Africa’s economy. However, business confidence indicators provide some reason for optimism, as they suggest the lower turning point is near. There are two main business confidence indices (BCI) in SA: that of the SA Chamber of Commerce and Industry (SACCI) and that of Rand Merchant Bank (RMB)/Bureau for Economic Research (BER).
The SACCI index isn’t a survey of business sentiment but a business cycle indicator compiled by using 13 sub-indices of statistics. The RMB/BER index is a more accurate gauge of sentiment.
The RMB/BER BCI declined by just one index point during second quarter 2009 to 26. As was the case during the first quarter, the decline in business confidence levels is surprisingly small in view of poor actual business conditions. That points to perceptions SA’s economy is approaching the lower turning point of the current cycle.
The SACCI BCI for May 2009 declined marginally to 81,8 and SACCI said as yet it provided no evidence of an approaching recovery. However, the SACCI BCI has now remained around the 82 level for the past few months.