Business Confidence Fails to Sustain a Recovery

The SACCI Business Confidence Index (BCI) for July 2012 was released today at the SACCI Offices in Rosebank, Johannesburg.

Business confidence continues to be vulnerable to negative influences from both the domestic as well as the international environments and the July 2012 SACCI BCI reflects the net results of such business climate impact. After the BCI bounced back by 2.1 points from the 92.8 in May 2012 to 94.9 in June, the BCI declined by four index points to 90.9 in July 2012. The July reading for the BCI is a twelve-year low and is down more than 8 points on a year ago. The latest move in the BCI indicates that business confidence remains highly fragile and unpredictable.

The short-term monthly improvements in June 2012 were to a large extent reversed in July 2012 with four of the seven sub-indices for the real economy being less favourable than in June. Where eight of the thirteen sub-indices of the BCI were positive on a monthly basis in June, only three sub-indices were positive in July 2012 with four indices being neutral. The majority of the sub-indices in the financial environment were neutral while the sub-indices in the real economy were largely negative on a month-on-month basis.

On an annual basis, seven of the thirteen sub-indices improved in July 2012 and one remained unchanged. This is better than in June 2012 when five sub-indices made a positive contribution to the BCI.

SACCI noticed with concern the slowdown of economic growth on a global scale and the widespread downward revision of expected growth rates for South Africa. This is especially concerning when the effect this will have on trade and the current account of the balance of payments is considered. Given the uncertain outlook for international trade, a growing trade deficit may have further adverse economic consequences. Foreign trade remains a key contributor in supporting and nurturing local business confidence.

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 Mr. Richard Downing, SACCI Economist and Mr. Neren Rau, SACCI CEO, August 7 2012

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