Underperforming financial market subindices in the form of share prices and the rand exchange rate battered business confidence in the last month of 2015, sending the South African Chamber of Commerce and Industry’s (Sacci’s) Business Confidence Index (BCI) to 79.6 in December – its lowest level for the year.

This represented a 3.1 index point decline from 82.7 in November and a hefty year-on-year contraction of 8.7 index points.

The BCI’s 2015 yearly average of 86.4 was its lowest yearly average since the 81.3 recorded in 1993.

The chamber added in a statement that a slowdown in building plans passed was a matter of concern, while, on the upside, merchandise export volumes had a notably positive impact on the BCI.

“The month-on-month changes in the BCI subindices in December were discouraging, as only export volumes made a positive contribution. Five subindices were negative and seven unchanged. In November, four subindices were positive, five unchanged and four negative,” it stated.

Only inflation and merchandise export volumes were in positive terrain in December, while merchandise import volumes, municipal services and private sector borrowing remained unchanged.

Sacci noted that the financial business climate remained tight, with international capital flows being affected by the recent interest rate hike by the US Federal Reserve.

International commodity and precious metal prices remained under pressure, while the domestic and global financial markets continued to experience hesitancy and uncertainty.

“The passive performance of the South African economy and its effect on the business mood was further complicated by changing of the guard at the National Treasury when it was least desirable.

“However, Sacci believes the partly restored situation provides an opportunity to do a turnaround and ensure policy consistency in a difficult global and domestic economic environment. Business confidence is in dire need of affirmative economic policy action,” the chamber concluded.