The SACCI Business Confidence Index (BCI) for June 2010 was released today.  The BCI bounced back from 82.0 in May 2010 and registered 84.8 in June 2010 – an increase of 2.8 index points. Since March 2010, the Business Confidence Index (BCI) of SACCI exceeded the level of the corresponding month in 2009. While only four BCI sub-indices were positive in May 2010 (month-on-month), it improved to six sub-indices in June 2010 with three sub-indices being neutral.

The World Cup 2010 tournament raised positive sentiment domestically and internationally.  The success of the tournament could boost domestic business confidence despite indications that the global economy may suffer a  depressed economic outlook for the medium term.

If the momentum provided by the World Cup is appropriately harnessed and directed, longer-term economic benefits will be realisable.  The thrust must be channelled in the direction of economic success and a business environment that augments and enhances business confidence.

SACCI is cautious about the direction in which the world’s economies are heading.  Although the global recovery appeared to be underway, it remains fragile.  Fiscal policy adjustments in the Eurozone and Britain caused distress.

SACCI noted the deterioration in the current account of the balance of payments in the first quarter 2010.  Exports declined and imports increased at a stage in the business cycle where it should not happen. It is now accepted that rand strength may have contributed to this situation.

The announcement of 79,000 people losing their jobs in the first quarter of 2010 and indications that there may be more job losses in the second quarter of 2010 are disturbing. These job losses occurred against wage rate increases more than double the inflation rate. With administered prices increasing by more than inflation, a wage rate more than double inflation and the weakening exchange rate, higher inflation can be expected in the medium term.

Click here to download the full BCI Review.

Mr. Richard Downing  SACCI Economist  082 822 5566
Mr. Neren Rau  SACCI CEO                   011 446 3800

Released by the SACCI, Johannesburg – 8 July 2010 / 

EMBARGO: 11:30 on 8 July 2010