Business Confidence up slightly in July

Wednesday, August 5, 2009

Johannesburg - South Africa's Business Confidence Index (BCI) has increased slightly to 83.2 points in July from 83.1 points in June, the South African Chamber of Commerce and Industry (SACCI) announced on Wednesday.

According to the SACCI, the contributing factors to the slight increase were higher export volumes and reduced inflation which resulted in a positive impact on the BCI for July.

"Although the monthly changes in the other sub-indices were neutral or negative, the movements were subdued and did not pull the BCI below the June figure," it said.

SACCI said that although the BCI for July was 4.4 points higher than the low 78.9 points registered in March 2009, the July figure was still 'flirting' with levels last seen in the first half of 2003.

"Business confidence remains sensitive and each month there are areas in the business environment which show vulnerability to the prevailing economic conditions," said SACCI.

The Chamber also highlighted that despite the current economic dispensation, disruptions to business caused by strikes and service delivery protests contributed to a tense, volatile business environment.

"Such activity will further dampen business and investor confidence and would undermine growth prospects and job opportunities at a vulnerable stage in the business cycle," the Chamber said.

It further stated that given the increase in the number of unemployed people and the depth of the recession there were growing irreconcilable demands on the economy.

"SACCI is of the opinion that the economy may be at a tipping point and will be adversely impacted if not appropriately managed and if restraint is not exercised in respect of the aforementioned demands."

It however added that South Africa has shown signs of resilience to the financial problems in that there were improvements in the Rand exchange rate, consumer inflation and producer deflation which would provide the basis for an economic recovery.

"Until there are indications that the depth of the challenges encountered in the business environment is appreciated and that such appreciation is reflected in the behaviour of all economic stakeholders, the SACCI BCI is likely to remain tentative," it said