Business Confidence Muddling On
The SACCI Business Confidence Index (BCI) for January 2015 was released this morning at a press conference at theSACCI Offices in Rosebank, Johannesburg.
SACCI's Business Confidence Index (BCI) rose by 1.0 index point in January 2015 to 89.3 from 88.3 in December 2014. The January 2015 BCI level is the slowest start to the SACCI BCI over the last 18 years since the 89.2 in January 1997 and does not project an improved state of affairs for the business mood in 2015.
The improvement in the BCI in November 2014 appeared to be a random increase as suggested by the return to levels below 90 in December 2014 and January 2015. The potential for serious disruptions of the economy and business are already present and will not only restrain economic activity, but may set the economy on an indifferent course in 2015.
No clear short-term trend from the individual sub-indices of the BCI could be established on a month-on-month basis. Two financial and three real activity sub-indices were positive month-on-month - similar to December 2014. The low business confidence was spread across activities with seven of the thirteen sub-indices that were negative year-on-year. The overall financial climate is slightly better compared to the year-on-year changes in December 2014 with the weighted rand exchange rate improving and more credit being made available in January 2015 than a year ago.
The pace of developments in the global and local economy at the start of 2015 could be described as exciting and/or perturbing - for better or for worse. A number of major developments could be crucial to the economic and business climate in 2015 and closer to home there are continuing high-risk disruptions to the economy and businesses, but also some possible supportive developments.
The net impact of these developments is feeding negative economic and business attitudes. The uncertain environment will contribute to a further decline in business and investor confidence. It is therefore of the utmost importance that the upcoming Budget give a reassurance of a consistent and business enhancing policy framework.
The trend in South Africa's economic growth and investment performance does not provide space for further toiling and squabbling about the way forward. The evidence suggests the appropriation of the best manpower and most efficient utilization of capital resources. This might inspire investor and business confidence for the future.
For a full background to this month's SACCI BCI see the Economic Commentary in the BCI report on www.sacci.org.za.
Statement issued by Peggy Drodskie, SACCI Acting CEO and Richard Downing, SACCI Economist, February 5 2015
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