Business confidence up in March
The South African Chamber of Commerce and Industry’s (Sacci’s) Business Confidence Index (BCI) improved by 0.9 index points in March to 92.7.
The March BCI was also 2.3 index points higher than the 90.4 of March 2013, reflecting a year-on-year improvement for the first time since June 2011.
Sacci noted that after six of the BCI subindices improved between January and February this year, two more turned positive in March, while three still remained unchanged.
Important subindices on real economic activity continued to improve in February with only export volumes declining from a high level in January.
Meanwhile, the financial subindices had an even stronger positive impact as four of the six subindices turned positive in March against two in February, Sacci said.
Further, the chamber stated that it was concerned about the consumer going through a difficult period and experiencing stress from various sources, which debilitated the consumer–business partnership that underpinned greater levels of economic activity.
“Unemployment, rising interest rates, rising debt and inflation are among the issues adversely impacting consumers and business alike. Some 15% of total consumer revenue is derived from own businesses and this revenue stream is dependent on a positive business climate and improving real consumer demand,” Sacci said.
The relative level of debt, together with the cost of servicing debt, was also a growing challenge in the economy.
Sacci pointed out that claims against households by the banking sector had increased by 24% in 2006 and 19% in 2007.
“This contributed to the elevated debt levels of 2008, which have since remained high, and was at 75% of disposable income in 2013. Servicing such debt levels, in a possible rising interest-rate environment, is an often underestimated pressure on households,” the chamber said.
Meanwhile, Sacci noted that there were no signs, at this stage, that the approaching national election was impacting the business psyche.
“[However], the outcome of the election and the policy positions taken thereafter will no doubt have a profound impact on business confidence, as will the emergence of a stronger consumer market and global geopolitical developments,” Sacci concluded.
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