Business confidence index declines

BUSINESS confidence dropped by a further five points to an almost four-year low of 38 in the third quarter, after it dropped six points in the second quarter, a Rand Merchant Bank/Bureau for Economic research business confidence index showed yesterday.

Historically, whenever the RMB/BER index dropped to below 30 points it signalled a pending recession, RMB chief economist Ettienne le Roux said.

More than six out of every 10 respondents were unhappy about prevailing business conditions. The survey, conducted last month, covered 2 000 firms in the building, manufacturing, retail, wholesale and motor trade sectors.

“Given how weak the economy is right now, and made even more vulnerable by increased uncertainty around political, economic policy and labour developments, it wouldn’t take much of a setback to actually push it over the edge,” Le Roux said.

A drawn out strike in the gold mining sector and/or another strong blow to the steel industry could make things worse.

“The economy’s resistance level is simply not strong enough,” he said.

The drop in the index was attributed to sharp declines in confidence among retailers and wholesalers.

Retail confidence fell by 18 points to 34 and wholesale confidence dropped by 14 points to 50.

Building confidence declined somewhat, but the mood among manufacturers and new motor dealers improved slightly. – BDlive