SACCI PRESS RELEASE
EMBARGO: 11:30 on Thursday, 4 February 2016
Business Confidence in Anticipation
SACCI today released the SACCI Business Confidence Index (BCI) for January 2016 at the Offices in Rosebank, Johannesburg.
The adverse set of local and global business and economic conditions in December 2015 gained momentum in January 2016 and negatively affected the SACCI Business Confidence Index (BCI). The SACCI BCI measured 80 in January 2016 and gained marginally on December 2015. The BCI was 0.4 index points higher in January 2016 than in December 2015 and 9.3 points lower than in January 2015.
The January 2016 month-on-month changes of the SACCI BCI sub-indices were more encouraging than the changes in December 2015. January 2016 saw five indices moving positive month-on-month, three remaining undecided and five turning negative. December had two positive sub-indices, six undecided and five in negative domain. Four real activity sub-indices and one financial sub-index contributed positively to the m/m BCI in January 2016.
The financial climate was slightly more favourable towards business in January 2016 than in December 2015 as the volume of credit extension to the private sector picked up but the other financial sub-indices weighed on the business climate with notably higher real financing costs.
There was no positive year-on-year impact on the BCI that came from real economic activity in January 2016. All thirteen sub-indices but for one sub-index, were negative with only lower core inflation (used as sub-index), making a positive year-on-year impact on the BCI. Inflationary expectations, however, could soon change the marginal positive inflationary environment.
In addition to global economic misfortunes, South Africa experienced homegrown concerns that worsened the economic and business climate in South Africa as the domestic economy was plagued by several disruptions that prevented the economy performing better. Not only were the economy and its performance affected, but it also had a bearing on public finance and several public sector institutions and tiers of general government to deliver goods and services. The credit downgrade during December 2015 by credit rating agencies and the possibility of these agencies giving South African government bonds junk status, is a major cause for concern.
SACCI admits that there are no quick fixes to provide an instant panacea for longstanding structural challenges. It is, however, important that action be seen as credible, feasible and consistent in order to re-establish investor and 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.
For more information contact:
Richard Downing SACCI Economist 082 822 5566
Peggy Drodskie SACCI COO 011 446 3800