Photo by: Bloomberg
Business confidence remained subdued in June as “further adverse economic developments” resulted in the South African Chamber of Commerce and Industry (Sacci) Business Confidence Index (BCI) remaining below 90 index points for a second month.
The June BCI improved marginally to 89.7, compared with 88.9 in May, but was down from the 90.2 registered in June 2013.
“The present negative business mood persisted as labour disruptions in the mining industry made way for new labour disputes in the metals industry,” Sacci pointed out.
The chamber said in a statement on Tuesday that it was concerned about the “broader unintended consequences” associated with strike activity having a “lasting impact” on business confidence, investor confidence and financial stability.
“Standard and Poor’s downgraded South Africa on June 13, mainly due to [the] impact of the platinum strike on the economy and cautionary notices remain in place in respect of the metal workers strike,” it commented.
While the average BCI for the first half of this year was 91.1, compared with 91.7 for the first half of 2013, the negative impact showed, with 11 of the 13 BCI subindices being in negative territory during June, compared with eight in May.
“Only share prices and municipal services showed positive levels compared to last year. Of the six financial subindices, only one, the all-share price index of the JSE, made a positive contribution to the BCI relative to June 2013,” Sacci pointed out.
Further, a less supportive financial climate for business confidence was prevalent in June, with inflation – at 6.6% – at its highest since July 2009, when consumer price index inflation measured 6.7%.
The rand had also depreciated by 10.5% year-on-year against a weighted British pound, the US dollar and the euro, while the volume of borrowing by households declined 1.3% year-on-year.
Gold and platinum US dollar prices were also lower than a year ago, while real financing costs were higher.