Business confidence improved marginally by 0.9 index points to 91.4 during September, the South African Chamber of Commerce and Industry (Sacci) reported on Thursday.

“This was the first time in five months that the Business Confidence Index (BCI) moved significantly above the level of 90 index points, with the September figure being significant, as it broke away from a seemingly stale position,” Sacci said, adding that while the September BCI was only 0.3 index points below that of September 2012, it was still well below the 100 of the 2010 base year. 

In contrast to August, the month-on-month changes in the BCI subindices in September were tipping more towards the positive.

On a year-on-year basis, six subindices made negative contributions to the BCI, six made positive contributions and one was neutral.

The improved levels of the municipal services index, merchandise export volumes, manufacturing output and building plans approved, as compared to last year, made notable positive contributions to business confidence.

Meanwhile, the year-on-year changes in the financial environment were less reassuring, as inflation, private borrowing, the rand exchange rate and precious metal prices had a negative impact on business confidence.

Sacci further stated that it was concerned that, while the National Development Plan envisaged that gross fixed capital should make up 30% of the country’s gross domestic product by 2030, the ratio currently stood at about 21%.

“In the second quarter of 2013, nearly no real growth in fixed investment spending took place in the construction, equipment and transportation industries. The imperative for foreign capital to augment and finance investment needs and the volatility of such capital flows are of concern,” the organisation said. 

Considerably higher levels of business confidence, that were also supportive of investor confidence, were a critical requirement in generating local fixed investment and sustaining financial inflows from abroad.

“The relatively low level of business confidence in South Africa needs a sustained continuation of the September 2013 BCI improvement. In the present election-orientated environment, government should be wary not to waiver from policy positions that advance the national economic interest,” Sacci concluded.