Moderate business confidence
Today SACCI released the May 2018 SACCI Business Confidence Index (BCI) at its Offices in Rosebank, Johannesburg.
The SACCI BCI moderated by 2 index points between April 2018 and May 2018, measuring 94 in May. The BCI was nevertheless still 0.8 index points up on the May 2017 level. The SACCI BCI (with year 2015 as 100), remained reasonably steady up to May 2018, after the notable regression seen since the start of 2014 and up to the 3rd quarter of 2017.
There were no notable negative movements in domestic-prompted sub-indices between April and May 2018, except for inflation caused by the VAT increase. The main negative impact came from lower merchandise import and export volumes, stemming from trade developments – beyond the scope of short-term remedies by South Africa.
Of the thirteen sub-indices of the SACCI BCI, four had a positive monthly impact in May; four were unchanged, and five had a negative month-on-month influence on the business climate. Increased new vehicle sales made a moderate, but positive monthly contribution to the business climate while manufacturing and lower real financing cost contributed positively to the BCI.
The year-on-year increase of 0.8 index points in the BCI was mainly attributable to five of the seven real-activity indices, while lower merchandise import and export volumes held/or wore the BCI down.
SACCI noted the lack of performance by local authorities with concern. As it becomes more visible, acute and noticeable that the lack of service delivery continues to inform the dissatisfaction of residents. This deficiency of proper service delivery by local government is affecting businesses operating in municipalities and in service-delivery areas, curtailing their ability to expand and create employment.
The recently announced 1st quarter GDP figures, notably the quarter-on-quarter seasonally adjusted annualised growth rate of minus 2.2% was disappointing. The year-on-year GDP growth rate for the 1st quarter 2018, however, was 0.8%, while the GDP growth rate (excluding agriculture) measured 0.9% – similar to the 2017 growth rate.
SACCI believes that once the challenge of good governance has been achieved, attention will focus on structural economic issues, placing South Africa on the road to sustainable economic recovery. Once investment and employment creation are reinstated, business confidence should shed short-term variations and enhance economic growth and participation.
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:
Alan Mukoki SACCI CEO 011 446 3800
Richard Downing SACCI Economist 082 822 5566
Read or download the Business Confidence Index Report below.
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