Positive move may be provided in a wider business context

BUSINESS confidence in South Africa ticked up 1 index point in November, but remained sensitive to the instability in the domestic and international climate.

The South African Chamber of Commerce and Industry (Sacci) business confidence index (BCI) said the sentiment improved to 92.7 points in November after declining 0.7 index points in October.

Sacci said the upward movement was specifically driven by the foreign trade performance as merchandise trade volumes of exports and imports were notably better than the previous month. It said the slight uptick should be viewed with caution as specific once-off positive data releases had a positive effect.

However, Sacci said if this positive move could be established in a wider business context, the BCI stood to recover.

Five sub-indices – energy supply, exports, imports, real private sector borrowing and rand exchange rate – improved on the October readings, while four declined, and four remained stable. Three of the seven economic activity sub-indices – inflation, real private sector borrowing and precious metal prices – contributed positively to the BCI.

The index was, however, still 3.4 points below the level of November last year.

The US-dollar price of precious metals was the only noteworthy sub-index that pushed the BCI higher in November 2019 compared to a year ago.

Sacci said the weak economic performance was especially having a negative impact on sub-indices of manufacturing, retail trade, new vehicle sales and construction.

It said the muted economic growth has also placed doubts on the growth potential going forward.

Sacci said the latest South African Airways labour challenges should provide the impetus for the government to address the state owned enterprise issue in a pragmatic way.

“The business climate remains tight as the economy continues to struggle. Lower global growth and uncertain world trade does affect the South African economic performance,” Sacci said.

“The difficulty in decision making aimed at the inevitable structural adjustments necessary to let the economy perform better, is still lacking.”