SA business confidence struggling to gain momentum, dropping 0.9 index points in January
CAPE TOWN – The latest SA Chamber of Commerce and Industry (Sacci) Business Confidence Index (BCI) figures suggest that business confidence still finds it difficult to gain momentum, with the index dropping 0.9 index points to 92.2 in January 2020.
The Sacci BCI report released on Thursday revealed that business confidence in January 2020 was weakened at 2.9 index points lower than in January 2019. Business confidence has trended higher over the past few months with the index hitting its highest level at 93.1 in December since the 93.3 of June 2019.
The Sacci BCI is a key indicator in gauging the overall health of the economy. If business confidence is high, then companies generally increase thei investment spending, believing that the future payoff from that investment will be substantial. Conversely when BCI declines consumers become less certain about their financial prospects, and they begin to spend less money and investment spending drops.
Intra-month changes in the business climate were notable in January 2020. The rand depreciated towards the end of the month, and share prices and commodity prices changed considerably.
Six of the thirteen sub-indices of the BCI improved on their previous month readings compared to four in December 2019, five were negative, and two remained unchanged, according to the Sacci report.
Sacci said a number of noticeable events and developments took place during January 2020 that not only had a bearing on the January 2020 business climate and the present economic milieu but may hold implications for medium to longer-term economic performance. “Most of these more recent developments towards the end of January will have additional impacts and add to global risk and uncertainty over at least the medium term.”
Developments during the latter part of January 2020, such as the coronavirus, underlined the sensitivity and uncertainty that plagued the global and the domestic economy, Sacci stated. Therefore February 2020 will be the month in which decisive developments may take place where the State-of-the-Nation Address (Sona) and the National Budget could determine the economic performance and the business climate for the longer term.