Business morale drops slightly

BUSINESS confidence dropped slightly in the first quarter of 2015, according to the latest RMB/BER business confidence index (BCI) released yesterday.

The BCI dropped by two points to 49, Rand Merchant Bank (RMB) said. “This means respondents are about evenly split between those that are satisfied and unsatisfied about prevailing business conditions.”

The first-quarter survey results also showed a balance between both good and bad forces that currently existed in the economy.

The lower petrol price and falling inflation on sales volumes were seen as having a positive impact by index respondents.

“The negative impact of load shedding and other constraining factors have depressed confidence among respondents doing business on the production side of the economy.”

Retail confidence bounced back from 55 to 60 index points in the first quarter, the same level that prevailed during mid2014, and before that, the beginning of 2012.

“Dealers of semi-durable and non-durable goods selling mainly to low-income earners (and on credit), no longer seem to be the best performers,” RMB said.

“Retailers serving high-income earners in general, and offering durable goods in particular, are now out-performing. What’s more, the latter group of respondents expect business conditions to improve further in 2015.”

Vehicle dealers saw improved trading conditions, with growth in units sold rising noticeably in the first quarter which lifted sentiment from 30 index points in the fourth quarter to 44 index points.

“While confidence is still in net negative territory, below 50, it’s the highest it has been since the second quarter of 2013.”

RMB chief economist Ettienne le Roux said while the BCI remained flat for the first quarter this year, it did not mean things had been static.

The survey was conducted between February 2 and March 4, and it covered 2 900 firms in the building, manufacturing, retail, wholesale and motor trade sectors.