South Africa's business confidence edged higher in the third quarter, but remained in depressed territory, as fewer power cuts provided respite to firms battling high-interest rates, according to a survey by a private investment bank.
The survey by the Rand Merchant Bank (RMB) and compiled by the Bureau for Economic Research showed the business confidence index climbed to 33 points in the third quarter, up from 27 points the previous quarter.
Nearly two-thirds of 1 050 senior executives surveyed said they were dissatisfied with current business conditions and the sentiment remained “still very weak”.
Annabel Bishop, the chief economist at Investec, said business confidence remained in depressed territory.
“A RMB/BER business confidence index (BCI) reading below the neutral 50 level shows that the majority of businesses are dissatisfied with prevailing business conditions, and so profitability, which is what the quarter three 2023 reading, at 33 registered for South Africa,“ she said.
Bishop said this was unsurprising given the failures at the state-owned electricity and logistics utilities to meet the full power and rail/port transport requirements of the economy.
“Reported estimates on South Africa’s freight demand show around R1bn is lost per day to the economy due to severe under-performance by Transnet,” she said.
Power cuts, which have plagued Africa's third-largest economy, reduced over the past weeks, compared with the first half of the year. However, production costs and stock levels were high, the survey said.
Consumer-facing sectors, such as automotive and retail, saw a rebound after a steep fall last quarter as softer prices helped profitability despite weak sales.
August also saw a taxi strike in the Western Cape province of the country that disrupted the local economy.
“Looking ahead, it will become increasingly important to also consider the impact of unrest, such as recently seen in the Western Cape, on South Africa’s economic fortunes in the run-up to the national elections next year,” said Isaah Mhlanga, the chief economist and head of research at RMB.