While the pace of decline in business confidence moderated during 2012, the level of confidence remained unacceptably low, the South African Chamber of Commerce and Industry (Sacci) said on Wednesday.

The business chamber’s Business Confidence Index (BCI) for December increased to 93 points and, although higher than the 91.7 points in November, Sacci stated that this was still not at a convincing level for investors.

The BCI was 6.1 points below its December 2011 level but remained better than the substantial 8.5-point year-to-year difference in March 2012.

Sacci further pointed out that, despite the December increase, the fourth quarter of 2012 was the poorest-performing quarter of the year. 

The chamber stated that, given that 2010 was the current BCI base year of 100 points, the deterioration to an average of 94.1 for 2012, after averaging 119 in 2006, was an indication of the erosion of local business confidence in recent years.

It added, however, that there were signs of a possible recovery in certain real activities towards the end of 2012, with export volumes, real credit extension, new vehicle sales, manufacturing output and passed building plans all improved over levels seen a year ago.

However, Sacci said improvements in confidence could only be realised if threats of continued labour protest activity were dealt with decisively through clear policy resolutions and the establishment of a socioeconomic partnership between government, business and labour.

Meanwhile, positive contributions to business confidence on both a monthly and a yearly basis came from manufacturing and construction activity, while all financial subindices had a positive impact, with the exception of the rand exchange rate. 

The rand was positive on a monthly basis but negative on a yearly basis, contrasting with new vehicle sales, which were negative on a monthly basis but positive on a yearly basis. 

Municipal services, import volumes and retail sales made negative contributions to the BCI on both a monthly and a yearly level.