The South African Chamber of Commerce and Industry's (Sacci's) Business Confidence Index (BCI) improved by 1.4 index points to 110.9, reversing the 1.4 index point decrease in the BCI in October.

Eight of the 14 subindices monitored had a positive or neutral impact on the BCI between October and November. Of these eight subindices, increased new-vehicle sales, share prices on the JSE and manufacturing output made the largest positive month-to-month impact on the BCI in November.

On a year-on-year basis, increased inbound tourism, increased new-vehicle sales and higher merchandise import volumes had a notable positive effect on the BCI.

The BCI was 3.6 index points higher in November than in November 2021 and 2.9 index points up on November 2020. The average of 109 for the BCI in the first 11 months of this year was slightly higher than the 108.7 for the corresponding period in 2021, which indicates a relatively stable situation.

Sacci says the erratic movement of the BCI this year, from a high of 112 in February to a low of 103.2 in May, a spread of 8.8 index points, mirrors the risk and uncertainty surrounding the business climate in the country.

South Africa’s real gross domestic product grew by 2.3% year-on-year in the first three quarters of the year. The tertiary sector increased by 4.1% year-on-year over this period, the secondary sector declined by 0.9% year-on-year and the primary sector dipped by 6.1% year-on-year.

Unemployment levels remain at concerning levels, Sacci says.

Further, import and export volumes experienced increased activity in the first nine months of 2022, increasing significantly by 15.9% y/y and 9.6% y/y respectively, with foreign trade activity thus playing an important role in support of business confidence.

"The unexpected performance of business confidence during 2022 was affected by a combination of global and local economic developments. However, the present level of the Sacci BCI indicates that the disruptive effects experienced during and after Covid-19 in 2020 and in 2021 have been largely overcome," the chamber notes.

"It appears that economic performance contributed to the relative stability of business confidence. Investor confidence should benefit from the latest economic performance," the BCI shows.

South Africa, as an open economy with 33% of domestic expenditure on imported goods and services and 35% of output being exported, remains sensitive to the performance of the economies of trading and investment partners. Business confidence also benefits largely from business and trade relations with other countries.

"Despite energy supply and logistics challenges, the economy has watered through, though the performance was not broad-based and mainly limited to the tertiary sector. International trade in goods and services provided an important backstop and assisted in maintaining a reasonable level of local economic activity and stability.

"It remains important to return greater economic stability and more certainty to South Africa. Political and social stability are also critical elements affecting investor confidence. South Africa cannot afford instability in a global environment of possible recessionary forces impacting on keener investor choices," Sacci says.

The effects of instability have on numerous occasions impacted the economy negatively. Some of the impacts may be immediate effects while others may affect medium-term and longer-term economic performance and eventually the welfare of the population. It is, therefore, essential that political and social stability are maintained, it emphasises.