The rebased South African Chamber of Commerce and Industry (Sacci) Business Confidence Index (BCI) measured 95.1 in June, up 3.3 index points from the 91.8 index points reported in May.

Sacci, which released its BCI results in Rosebank, Johannesburg, on Wednesday, noted that the June improvement recaptured some of the 3.7 index points lost in May.

However, notwithstanding the improvement, the Sacci BCI was 2.8 index points below the BCI level of June 2015.

“The decline in the BCI from the first half of 2015 to the second half of 2015 was 5.3% and, from the second half of 2015 to the first half of 2016, the decline was 3.8%. It appears that the pace of the decline in business confidence has slowed, though the BCI remained at relatively subdued levels,” said Sacci economist Richard Downing.

There were less setbacks in the real business environment in June, with two of the seven subindices declining month-on-month compared with four declining subindices in May.

According to Sacci, the month-on-month financial climate also improved, with three subindices improving in June 2016 compared with none in May.

The yearly BCI comparison suggested an easier business climate in the real economy in June 2016, compared with June 2015, although the financial circumstances remained tight.

The positive monthly contributions to the BCI mainly came from merchandise export volumes and, to a lesser extent, from an increase in approved building plans and lower inflation.

“Seasonally adjusted merchandise import volumes declined month-on-month in June, followed by the real financing cost and real retail sales,” said Downing.

The largest negative year-on-year contribution to the BCI in June came from the pressure on the rand exchange rate, followed by financing costs and merchandise import volumes.

Notable positive year-on-year impacts on the BCI in June came from merchandise export volumes and building plans passed. The financial environment, compared with a year ago, was marginally better in June, where two subindices remained unchanged while all the financial subindices declined year-on-year in May 2016.

“The impact of the Brexit decision on the world economy led early commentators to speculate, which added to economic uncertainty. South African trade agreements already exist with the EU and Britain and, although it can be contractually reviewed, the potential economic impact on South Africa will not be felt in the foreseeable future,” noted Downing. 

He added that a possible recession in Britain and weaker growth in the European Union (EU), owing to the repercussions of the Brexit decision, may have a negative effect on the South African economy and a struggling world economy.

“South Africa will continue to benefit from retaining Britain and the EU as important trading and investment partners,” Downing concluded.