Business confidence in SA drops

Thursday, May 5, 2011

Pretoria - The Business Confidence Index dipped to 86.9 in April, 1.4 points down compared to March 2011, the SA Chamber of Commerce and Industry (SACCI) said on Thursday.

It said because of the decline, the BCI was only 2.7 index points higher in April 2011 than in April 2010, compared to the 5.1 points annual improvement in March this year.

However, there were important reversals in April 2011 in support of business confidence. A positive monthly impact came from liquidations, manufacturing output, export volumes and import volumes.

"The SACCI Business Confidence Index (BCI) again showed a ratchet effect by retracting in April. However, the monthly volatility and the frequent changes in sub-index measures from positive to negative indicates a lack of sustainable momentum and a clear direction in business confidence," the organisation said.

The annualised impact on the BCI remained "positively biased" as seven sub-indices were positive, five were negative and one sub-index was neutral.

In addition, although gold reached record US dollar price levels owing to the weaker US dollar and a more risky global economic environment, domestic financial circumstances failed to reflect a balance in favour of positive performance.

Underlying inflation also remained stable, but overall price stability weakened.

"This month's dip in business confidence in South Africa comes in the wake of further uncertainty in the global economic environment. Lower economic growth than expected, increasing inflation, fiscal tightening and rising interest rates became more prevalent - a closing window of opportunity," said SACCI.

SACCI further expressed concern about the decline in employment figures between the fourth quarter of 2010 and the first quarter of this year, noting that the significantly high number of youth unemployment was "especially disturbing".

" By lowering the costs of doing business (especially for small enterprises) and easing the rigidity of the labour market, South Africa can catalyse job creation," it added