http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 13.38Change: 0.05
R/$ = 11.57Change: -0.03
Au 1276.24 $/ozChange: -2.53
Pt 1262.50 $/ozChange: -7.00
 
 
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
JSE-listed Hudaco Industries’ share price climbed nearly 16% on Friday afternoon as the company announced that it would bring an end to a years-long tax challenges with the South African Revenue Service (Sars). In a trading statement to shareholders, Hudaco revealed...
President Jacob Zuma
South Africa was open for more investment and the country offered investment opportunities that no “wise” businessperson should miss, President Jacob Zuma told captains of commerce and industry during the yearly Business Interaction Group meeting on the sidelines of...
The Department of Trade and Industry (DTI) has rejected claims by black economic-empowerment (BEE) advisory firm EconoBEE that there is likely to be a delay to the scheduled May 1 implementation of the revised BEE Codes of Good Practise. “We are on track for the May...
More
 
 
Recent Research Reports
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
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.
 
 
 
 
 
This Week's Magazine
BRUCE BRADFORD The 3D printers have a clear upgrade path to eventually print in wood, ceramics and metal-alloys
Three-dimensional (3D) printers being sold in South Africa by electronics distributor Rectron currently print in two types of plastic, but have a clear upgrade path over the next five years to eventually print in wood, ceramics and metal-alloy materials, says Rectron...
The world’s two dominant commercial aircraft manufacturers, Airbus of Europe and Boeing of the US, both recently announced that they had made record aircraft deliveries in 2014. Boeing set a global record for the industry with 723 commercial aircraft delivered, while...
The Western Cape is shifting further into the renewable-energy space with the official opening of a factory specialising in solar inverters, a key component of solar photovoltaic (PV) plants. The investment in the manufacturing facility in Cape Town aims to boost the...
Business Leadership South Africa (BLSA) last month welcomed Cabinet’s establishment of a technical team war room to undertake various interventions to improve electricity supply security over the short- and medium-term, but added that the private sector also had a...
Despite a rapid rise in mobile connections and the economic and social benefits of such connectivity, more than half of the world ended 2014 unconnected. For this reason, industry commentators believe the biggest impact of mobile technology is still to come –...
 
 
 
 
 
 
 
 
 
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