Business Confidence Continues to be Affected by
Tentative Climate

The SACCI Business Confidence Index (BCI) for June 2011 was released today at the SACCI Offices in Rosebank, Johannesburg.  The BCI improved to 86.8 in June 2011 – i.e. one index point up on May 2011. 

The BCI averaged 86.9 in the first half of 2011 compared to 82.8 in the first half of 2010.  The improvement in the first half of the year as compared to the corresponding period of 2010 was quite strong. This improvement must be viewed in the context of weak performance in the first half of 2010. Notwithstanding the improved average level in the first half of 2011 relative to 2010, business confidence has been on a slight downward trend since the start of 2011. 

Five of the thirteen sub-indices declined between May and June 2011 while one sub-index remained neutral. The year-on-year (y/y) changes indicate that the strength of economic improvements remains weak with major sectors failing to demonstrate sustainable performance.  Manufacturing and construction continued to show a lack of direction while import volumes also reflect tentative domestic circumstances

SACCI is concerned that since the upward phase of the business cycle started in September 2009 (as identified by the SA Reserve Bank), fixed investment by the public and the private sector declined. The slight increase in private sector fixed investment in the 4th quarter 2010 and in the 1st quarter of 2011 is welcomed.

The driving force behind the current performance is fragile as the basis for current high household spending levels is difficult to reconcile with employment levels and low credit extension. The sustainability of the present consumption spending patterns (private and public sector) is dubious and may contribute to a false sense of improved business confidence.

For further background to this month’s SACCI BCI, please CLICK HERE

For more information contact:
Mr. Richard Downing  SACCI Economist  082 822 5566
Mr. Neren Rau  SACCI CEO                   011 446 3800