Uneasy Business Confidence

SACCI today released the SACCI Business Confidence Index (BCI) for December 2015 at their Offices in Rosebank, Johannesburg.

A wide range of matters impacted negatively on the business climate in December 2015. As a result, the SACCI Business Confidence Index (BCI) slipped back further to 79.6 in December - the lowest level for the BCI in 2015.  The BCI declined by 3.1 index points from 82.7 in November 2015 and by 8.7 between December 2014 and December 2015. The annual average of 86.4 for the BCI for 2015 is the lowest annual average since the average of 81.3 in 1993.

The negative affect on the BCI mainly came from financial market sub-indices like share prices and the rand exchange rate. However, a slowdown in building plans passed is a matter of concern. Merchandise export volumes had a notable positive impact on the BCI. The month-on-month changes in the SACCI BCI sub-indices in December 2015 were discouraging as only export volumes made a positive contribution. Five sub-indices were negative and seven unchanged. In November, four sub-indices were positive, five unchanged and four negative.

The year-on-year comparison of business climate indicators with December 2014 was negative.  Only inflation and merchandise export volumes were in positive terrain in December 2015 while merchandise import volumes, municipal services and private sector borrowing did not change.

The financial business climate remains tight with international capital flows being affected by the recent interest rate hike by the Fed in the United States. International commodity and precious metal prices remain under pressure.  The domestic as well as global financial markets continue to experience hesitancy and uncertainty.

The passive performance of the South African economy and its effect on the business mood was complicated by changing of the guard at the Treasury when it was least desirable. However, SACCI believes the partly restored situation provides an opportunity to do a turnaround and ensure policy consistency in a difficult global and domestic economic environment. Business confidence is in dire need of affirmative economic policy action. 

For a full background to this month’s SACCI BCI see the Economic Commentary in the BCI report on www.sacci.org.za.

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Statement issued by Richard Downing, SACCI Economist, 7 January 2016