http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 14.22Change: -0.23
R/$ = 11.16Change: -0.09
Au 1240.10 $/ozChange: -4.17
Pt 1243.50 $/ozChange: -18.70
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Jun 07, 2012

Domestic, global uncertainties weigh on business sentiment

Back
Engineering|Johannesburg|Africa|Components|Copper|Efficient Group|Merchant Bank|Africa|Europe|South Africa|Building|Manufacturing|Dawie Roodt|Hugo Pienaar|Sacci
Engineering||Africa|Components|Copper||Africa|||Building|Manufacturing|
engineering|johannesburg|africa-company|components|copper|efficient-group|merchant-bank-company|africa|europe|south-africa|building|manufacturing|dawie-roodt|hugo-pienaar|sacci
© Reuse this



Domestic and global uncertainties weighed on sentiment in the second quarter of 2012, with South Africa’s political climate and a looming European crisis flagged as noteworthy constraints on business.

This is according to the Rand Merchant Bank's and the Bureau of Economic Research’s (RMB/BER) Business Confidence Index (BCI) released on Thursday.

The RMB/BER BCI fell by 11 points to 41 in the second quarter of 2012, following a marked increase in the first quarter.

Efficient Group economist Dawie Roodt told Engineering News Online that the falling exchange rate and deteriorating equity market in South Africa, brought on by international economic uncertainty, also contributed significantly to weakening business confidence.

“It is unclear what will happen in Europe, which leads to severe uncertainty in terms of the future and therefore also affects local business confidence. What is clear, though, is that should the European economy implode, it would be bad for all of us,” Roodt said.

BER senior economist Hugo Pienaar said at the BER conference, in Johannesburg, earlier in the week, that decreasing confidence was resulting in the domestic corporate sector keeping its money in cash, rather than employing it in fixed investments.

He added that the current pressure on the rand could persist in the short term, or until the outcome of the Greek elections was known.

However, Pienaar remained optimistic, stating that the rand could show significant recovery towards the end of 2013, provided the global economy takes an upward turn.

Heightened risk to global growth also resulted in a sharp price fall in key commodities such as oil and copper, which further hindered business confidence.

The RMB/BER BCI showed that the mood during the second quarter soured in four of the five business sectors making up the index.

Retail confidence fell from 61 index points in the first quarter to 39 in the second, the lowest level in two years. RMB and the BER attributed the fall mainly to weaker growth in sales volumes across all types of retailers.

Manufacturing confidence plunged from 47 index points to 29, despite domestic and export sales volumes holding up in the second quarter. Rising inventory levels relative to expected demand, as well as shortened delivery times of orders received underscored the concerns.

New-vehicle-dealer confidence also declined from 73 index points to 65, in large part owing to noticeably slower growth in sales.

Sentiment among building contractors deteriorated from 31 to 24 index points in the second quarter. The decrease stemmed mainly from nonresidential contractors, whose confidence fully reversed its first-quarter gain.

However, wholesale business confidence increased modestly from 48 to 50 index points on the back of improved sales of nonconsumer and consumer goods.

“Given deteriorating prospects for consumer spending, as well as for exports, the pressure is now even more on fixed investment to come to the economy’s rescue. The sharp drop in business confidence does not bode well for prospective private sector fixed investment, in particular, and economic growth in general.

“If ever there was a time for the government to kick capital expenditure into higher gear, it is now,” RMB and BER stated.

Meanwhile, the South African Chamber of Commerce and Industry (Sacci) BCI for May 2012 declined by a further 1.5 index points to 92.8 - its lowest level in more than nine years.

Sacci's BCI was currently 8.4 index points lower than in May 2011, when it registered 101.2.

Sacci stated that the BCI was marred by notable negative movements in the subindices in May. Only two of the thirteen subindices were positive month-on-month, while the financial and real economic components had just one subindex each that showed positive growth.

Over the medium term, the yearly comparison showed that three of the subindices improved in May, this included household spending, government spending and lower real interest rates.

“The contagion from the economic impasse in Europe is gaining in global impact as faster-growing economies are now also experiencing a slowdown while circular and multiplier effects continue to grow,” Sacci stated.

It added that the lack of alignment across economic policy positions was posing a challenge locally, as business sought policy stability in an increasingly perplexing domestic economy.
 

Edited by: Mariaan Webb
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
 
Latest News
Hot on the heels of the launch of Rustenburg’s rapid transport system’s brand name and logo last week, a negotiation framework agreement (NFA) has been formally agreed to and signed by the Rustenburg Local Municipality (RLM) and taxi and bus operators affected by the...
The runway at the George Airport, in the Western Cape, has been rehabilitated to improve safety, in terms of run-off and storm water drainage, and the structural capacity of the pavement surface. The scope of work comprised the extension of Runway 11/29, the...
Tanzania and China have signed investment deals to build a $1 billion satellite city and $500 million financial centre in the commercial capital Dar es Salaam, the latest sign of Beijing's deepening ties with East Africa. The total of five deals, worth more than $1.7...
More
 
 
Recent Research Reports
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
 
 
 
 
 
This Week's Magazine
Integrated energy and chemical company Sasol has partnered with Unisa Graduate School of Business Leadership (SBL) professor and founder and CEO of PanAvest Partnership Dr Douglas Boateng to publish a series of books on executive supply chain management aimed at...
MORNÉ DU PLESSIS Increased urgency and burgeoning awareness of the importance of these issues are beginning to change political risks and, thus, State responses to environmental concerns
The World Wide Fund for Nature’s (WWF’s) 2014 Living Planet Index (LPI) indicates that there has been a 52% decline in vertebrate species since 1970. The Index tracked the trends of 10 000 discrete populations of over 3000 vertebrate species between 1970 and 2010.
Rwanda has joined a number of East African countries seeking to import electricity from Ethiopia as its demand grows. After it became apparent several generation project it is implementing will not come on stream early enough, now plans to import 400 MW from Ethiopia...
Metrorail’s first new passenger train will arrive in November next year, says Passenger Rail Agency of South Africa (PRASA) CEO Lucky Montana. “Next year we will be able to put our hands around the infrastructure and equipment we have been talking about for so long.”
The Competition Commission has launched an investigation into what it says are “price fixing, market division and collusive tendering in the market for the manufacture and supply of automotive components to original equipment manufacturers” (OEMs, or vehicle...
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks