JOHANNESBURG - Business confidence in South Africa sank to a 21-year low in the first quarter of the year.
Rand Merchant Bank (RMB) yesterday reported that its Business Confidence Index (BCI) slumped to 18 points in the quarter, following a marginal increase to 26 in the fourth quarter of 2019. RMB said the first quarter’s drop was due to a turnaround in confidence in building, manufacturing and retail trade - sectors that had showed improvements in the fourth quarter.
It said sentiment in the building sector plummeted 16 points to a 22-year low of 15, while manufacturing fell from 24 to 17, as plunging domestic and export sales forced manufacturers to slash production further.
Retail confidence reversed all the fourth quarter’s gains - falling from 30 to 18 as sales volumes of food, hardware and other consumer durables remained dismal in the first quarter. Clothing sales volumes recovered somewhat, but this came about mainly through discounting, which hurt retailers’ gross margins. Confidence for wholesalers deteriorated a further 3 points to 25, while in the case of new vehicle dealers it also continued to worsen - falling to 16 - both on the back of ongoing poor sales.
RMB said more than 80percent of respondents therefore perceive prevailing business conditions as unsatisfactory after 1800 executives were surveyed between February 12 and March 2. Sentiment among wholesalers and new vehicle dealers effectively remained unchanged at heavily depressed levels. RMB chief economist Ettienne le Roux said the timing of the prospective sharp coronavirus-induced global slowdown could not have been worse for an economy already in recession.