September business confidence falls

Wednesday, October 3, 2012

Pretoria - Business confidence fell by 3.3 index points in September, the South African Chamber of Commerce and Industry (Sacci) said on Wednesday.

"The Business Confidence Index retreated by 3.3 index points from 95 in August 2012 to 91.7 in September 2012," said Sacci as it released its monthly BCI.

In the first quarter of 2012, the BCI declined by 0.6 index points. It had declined by 2.6 points in the second quarter and in the third quarter by 1.5 points, leading to a total loss of 4.7 points since the beginning of the year.

"With the BCI at 100 in 2010, the 91.7 in September 2012 remains a depressed level for local confidence," noted Sacci.

In September 2012, the BCI was 6.7 points below its level in September 2011 with recent developments in the domestic market weighing on the BCI, said Sacci alluding to recent strikes in the country.

Both the financial and real economic sub-indices fared worse in September compared to the previous month. On an annual (year-on-year) basis, 11 of the 13 sub-indices declined in September 2012 and only two were positive.

"This is a dramatic turnaround on the situation in August 2012, when nine sub-indices made a positive contribution to the business climate," said Sacci.

Sacci further expressed concern at the recent downgrade of South African government bonds by Moody's and South Africa's loss of two positions in the 2012/2013 WEF competitiveness rankings to 52 from 50 out of 144 countries.

"South Africa's worst performing competitiveness areas are health, primary education and labour markets. Financial markets and market size is where South Africa's competitiveness strength lies," said Sacci.

Government had taken note of the downgrade. Diminishing government institutional strength, reduced fiscal space, increased concerns about future political stability and relatively high labour costs despite high unemployment were some of the reasons given by Moody's for the downgrade.

"The reasons given by the rating agency for the downgrade are currently being addressed through various government programmes," said government last week.

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