Pretoria - Business Confidence in May continued its downward trend, falling to its lowest level since November 2002.
Releasing its monthly Business Confidence Index (BCI) on Thursday, the South African Chamber of Commerce and Industry (Sacci) said business confidence continued its downward trend, declining by a further 1.5 index points to 92.8 from 94.3 in April 2012.
"The BCI is currently 8.4 index points lower than in May 2011 when the BCI registered 101.2. In May 2012, the BCI was at its lowest level since November 2002 when the index stood at 92.1," said Sacci on Thursday.
The current downward trend in the BCI, which started in April 2011, has weakened further to mark a conspicuous deterioration in the business mood.
Only two of the 13 sub-indices of the BCI were positive month-on-month. Both the financial and real economic components had only one sub-index each that moved in a positive direction.
Over the medium-term, only three of 13 sub-indices improved in May 2012, namely household spending (retail and vehicles), government spending and lower real interest rates.
"Sacci is concerned that the fiscal tightrope that Europe needs to walk while balancing economic sustainability and political intolerance will leave Europe's debt crisis unresolved for the short to medium-term. The contagion from the economic impasse in Europe is gaining in global impact as faster growing economies are now also experiencing a slowdown while circular and multiplier effects continue to grow," it said.
The economic circumstances that were unstable and weakening both abroad and domestically pose serious challenges to the business environment and business confidence in South Africa.
The BCI's highest level was 122.1 in December 2006 and its most recent low was 93.1 in March 2009, during the recession which started in December 2007.
