While the 15-point climb in the Rand Merchant Bank (RMB)/Bureau for Economic Research (BER) quarterly Business Confidence Index (BCI) for the first quarter of 2010 was “heartening”, RMB chief economist Ettienne le Roux warned that the improvement remained patchy and “heavily leveraged” towards the health of global demand.

The BCI rose from 28 points to 43 points in the first quarter of the year, recording its single biggest increase between two consecutive quarters in 16 years.

It was now back to the level where it had been before the global economic crisis started, the researchers pointed out on Tuesday.

However, while the index, along with other indicators, provided some evidence that the domestic economy had entered an “upward phase” in the business cycle, the researchers warned that some realism was still required.

Confidence remained in the “net negative” territory, or below the 50-point level, which showed that the majority of respondents to the survey were still pessimistic in their outlook, said the researchers.

Further, the jump in the BCI was mainly as a result of a surge in the confidence of wholesalers, which RMB and the BER warned was traditionally a sector that delivered volatile results from one quarter to the next.

“Although there is no doubt that the economy is recovering, we are not yet in a broadly based upswing. While gross domestic product growth of more than 3% is possible this year and next, the longevity of the upswing hinges on higher levels of consumer and private investment spending ultimately taking over from what should be a strong rebound in exports and inventories in 2010, as production levels catch up with demand,” Le Roux commented in a statement.

Wholesaler confidence had improved to 50 points in the quarter, compared with 27 points in the fourth quarter of 2009, while new vehicles dealer confidence improved to 60 points, compared with the 29 points recorded the previous quarter.

Further, retailer confidence had surpassed the neutral 50-point level, increasing to 51 points, up from the 41 points recorded in the previous quarter.

However, the mood in the building and manufacturing sectors remained “generally depressed”, the researchers stated.

Manufacturer confidence had improved to 28 points, up from the previous level of 19 points, but overall production and sales volumes for most manufacturing industries remained low.

The building subindex also improved to 26 points, up from 23 points in the previous quarter, but conditions remained tough, stated the researchers.

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