The BCI in Perspective

The Business Confidence Index (BCI) of SACCI is a market-related index that reflects not what business is saying, but what it is doing and experiencing. It is therefore not an opinion/perception-based index. It is likely that in any one month the business mood will be influenced both positively and negatively by various developments in the economy. The BCI seeks to reflect the net results of these influences.

The BCI is a composite weighted index of thirteen sub-indices. Various economic indicators are used to compile the thirteen sub-indices. The indicators that are monitored have been judged by business to have the greatest bearing on the business mood.

The BCI was first published in 1985. There have been previous adjustments to the BCI with the latest revision in February 2006. The latest alteration to the composition of the index takes account of the structural changes in the domestic economy, relative price and financial stability, the effect of globalization as well as the changing environment for doing business in and with South Africa. Business cycle movements in the sub-indices are important to business confidence levels.

From February 2006 the BCI is calculated according to the new composition. To ensure a continuous BCI series, it was necessary to adjust the historical figures to bridge any technical discrepancies and ensure comparability in the index numbers over time. The base year for the BCI was changed from 2000 to 2005.

The following sub-indices make up the BCI:

1. Average monthly weighted exchange rate of the rand against the US dollar, the euro and the British pound as well as the volatility of the rand exchange rate
2. Core consumer inflation rate for metropolitan and urban areas
3. The real predominant prime overdraft rate
4. Retail sales volumes
5. Rate of change in real credit extension to the private sector
6. Average weighted US dollar price of gold and platinum
7. Merchandise import volumes
8. Merchandise export volumes
9. New vehicle sales
10. Liquidations of companies and closed corporations
11. Volume of manufacturing production
12. Real value of private sector building plans passed, and
13. All-share Price Index of the JSE Securities Exchange.