Business confidence contracts in Feb

Thursday, March 3, 2011

Pretoria - The Business Confidence Index (BCI) in February 2011 contracted, the South African Chamber of Commerce and Industry (SACCI) said on Thursday.

The BCI contracted to 86.4 from 87.4 in December 2010 and was 3.4 index points higher in February 2011 than in February 2010.

"Despite this month's contraction, upward momentum was considered not to have been lost and it is believed that the BCI will continue its path to recovery since the trough in business confidence in the first quarter of 2009," said SACCI.

The financial environment sub-indices were mixed in February compared to January. With the sub-indices on the exchange rate and real cost of financing being negative, the financial environment appears to be leaning towards tighter financial conditions in future.

While the improvement in the BCI on a year-to-year basis continued in February, there is still concern about manufacturing output and construction that is yet to gather pace, despite the outlook for economic growth being more positive than a year ago.

SACCI said the political turmoil in some Middle Eastern countries and North Africa had an immediate effect on the global economy, as fears of delivery difficulties and shortages in the supply of crude oil pushed up prices.

"2011 started with the global economy still battling to gain momentum. Geo-political developments, as well as the problems with scarce natural resources have again started to torment the recovery of the world economy. In the immediate future, business confidence might be severely tested, given economic uncertainty and possible price instability," said the Chamber. -BuaNews