Johannesburg - Business confidence in South Africa rose to its highest level in four months in November, helped by improvements in new vehicle sales and manufacturing output, the SA Chamber of Commerce and Industry (Sacci) said on Wednesday.
Sacci’s monthly business confidence index (BCI) rose to 93.9 points in November, its highest reading since August, from 93 points in October.
During 2016, the BCI recovered relatively well up to July when it reached 96 points, but then contracted to 90.3 points in September.
Sacci said: “The recovery of the BCI in October and November 2016 was achieved in a depressed domestic and global economy and further harmful local socio-political diversions that unfavourably influenced the business climate. Notwithstanding the volatility in the business climate, the present turnaround in the BCI could gather more momentum.”
The business organisation said apart from these factors, business adjusted to unpredictability of circumstances. “Business flexibility partly contributed to the slightly improved business confidence.”
Sacci said positive monthly contributions to business confidence came from real value of building plans passed, vehicle sales and manufacturing output.
Negative impact
“Merchandise export volumes, retail sales volumes, share prices, energy supply and costs made the largest negative month to month impacts on the BCI in November.”
The findings of the Sacci survey is in line with the fourth quarter RMB/BER Business Confidence of November 29, which fell four points to 38points. It said after considerable increases in the third quarter, confidence dropped back in the motor and retail trade sectors in particular, and to a lesser extent in the wholesale trade.
South Africa has received a reprieve by no further downgrades from all three reputable ratings agencies in their latest credit rating reviews.
“The prospect for a more induced and inclusive economic growth climate and attention being paid to notably public finance matters counted in South Africa’s favour. It is important that the negative outlook by all three rating agencies be turned around in the next six months.”
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Meanwhile the Merchantec CEO Confidence Index, suffered a setback in the final quarter, declining 2.1 percent following its gradual recovery in the second and third quarters. The index now lies below the neutral score line of 50 points, at 47.9 points, Merchantec Capital said yesterday.
It said chief executives believe the rand gains, following the dropped charges against Finance Minister Pravin Gordhan and the news of escaping a junk rating, were likely to be short lived.
“The CEO Confidence Index, which is a forward-looking indicator, has closely tracked the rand since 2009 and as concerns still cloud local economic outlook, the value of the rand may depreciate even further in 2017.”
Merchantec said factors such as political uncertainty, government infighting, the State Capture report, growing unemployment rates, nuclear plans, and B-BBEE policies remained concerns for the country’s chief executives.