Lackluster Business Confidence in December: SACCI

Business Confidence

The South African Chamber of Commerce and Industry (SACCI) on Thursday said that its Business Confidence Index (BCI) was uninspiring in December 2019.

“The BCI remained virtually unchanged at 93.1 in December 2019, if compared to 92.7 in November 2019. It was 2.1 index points below the level of 95.2 in December 2018,” said Alan Mukoki, SACCI CEO.

“The BCI declined from an average of 95.5 in 2018 to 92.6 in 2019. The composite BCI stood its ground in December, but some of the sub-indices were quite inconsistent during December.”

Mukoki said that six of the thirteen sub-indices of the BCI were unchanged between December and November 2019. Four were positive, and three made a negative impact on the BCI in December.

“Despite the impulsive moves in some of the financial sub-indices during December, the six financial sub-indices on average remained unchanged,” he added.

“Of the seven activity sub-indices, the impact between negative and positive moves in December were slightly positively slanted.”

‘Merchandise volumes boosted Business Confidence’

Mukoki said that the largest monthly positive impacts on the BCI came from merchandise import volumes, the real value of building plans passed, new vehicle sales, and manufacturing output.

“Real merchandise exports and energy supply (due to load shedding and oil price), had notable negative monthly impacts on the BCI in December.”

He added that the BCI declined by 2.1 index points on the December 2018 level.

“The most positive annual impacts came from the US-dollar price of precious metals, new vehicle sales and lower inflation,” Mukoki described.

“Merchandise import and export volumes, and energy supply had notable negative impacts on the BCI in December 2019 compared to December 2018.”

Business looking to SONA 2020 for direction

He said that the 3rd quarter 2019 data on the South African economy reflects an under-performing economy.

“Indications are that the economy’s potential is wavering and requires positive corrective steps to direct the economy in an appropriate direction. The subdued world economy also does not facilitate an export driven recovery,” he explained.

“With South Africa’s structural challenges impacting on our global competitiveness, the business climate has remained murky.

“The upcoming SONA, Budget 2020/21, and the evaluation by the credit rating agencies, will provide some direction on the way forward.”

Mukoki said that together with the limited capacity of a large number of public sector entities, the deficit on the current account and the flows on the financial accounts of the BoP present South Africa with the reality of the present economic situation.

“Sensitivities with regard to the fiscal situation, the balance of payments, views expressed in the SONA, the Budget, and credit ratings, will have a decisive impact on the business climate and the economic performance of South Africa in 2020.”

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