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Sacci BCI sees slight business confidence recovery

Sacci BCI sees slight business confidence recovery

Photo by Bloomberg

3rd September 2014

By: Natasha Odendaal

Creamer Media Senior Deputy Editor

  

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South Africa’s business confidence has seen a mild recovery, with indications that the Business Confidence Index (BCI) has bottomed out, the South African Chamber of Commerce and Industry (Sacci) said on Wednesday.

The slight 1.1 index point hike to 89 during August, from 87.9 points in July, could signal a positive change for the country’s economic growth.

While the BCI reading was 1.5 points below the August 2013 level of 90.5, the index had steadied in a “narrow band” around the level of 90, with an average of 90.4 in the first eight months of 2014, the chamber pointed out.

However, the economy continued to grapple with growth momentum, while also being challenged with the impact of the wide-reaching labour market disruptions earlier this year.

“South Africa’s biggest challenge is to accelerate the pace of economic growth … and sound institutions and a relatively stable and predictable policy and investment environment are imperatives,” Sacci stressed.

The BCI subindices reflecting key economic activities would have to perform more strongly on a continuous basis in order for improvements in business confidence to gather pace.

The index showed that six of the thirteen BCI subindices had made positive contributions in August, compared with five subindices in July. The manufacturing output, import volumes and building activity indices had made positive contributions in August.

“Apart from inflation, real financing cost and share prices, the other three financial subindices, namely private borrowing, precious metal prices and the rand exchange rate, made positive monthly contributions,” Sacci highlighted.

It pointed out, however, that eight of the thirteen BCI subindices had made a negative yearly contribution to the BCI in August.

However, business confidence could be “positively influenced” towards year-end by lower inflation, a stronger rand, improving international trade and fewer disruptions to the economy by exogenous factors.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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