SA business mood still improved, but tangible results needed - index

Cape Town - Despite the continuation of an improved business mood in South Africa, there are indications that it needs to be backed up by a real improvement in the economy and a further boost in financial conditions.

This is one of the conclusions of the Business Confidence Index (BCI) for March released by the South African Chamber of Commerce and Industry (Sacci).

Sacci said the direction of most of the business climate indicators is still positive, but momentum appears to have slowed. It believes the positive investor tendency of the fourth quarter of 2017 should continue to augment the present business climate.

The March BCI was still 3.8 index points above the BCI level of March 2017, but declined by 1.3 index points from 98.9 in February 2018 to 97.6.

It is now five months since November 2017 that the BCI kept to levels above 95. The index on average measured 98.7 in the first quarter of 2018, compared to 95.7 in the first quarter of 2017 and 94.8 in the fourth quarter of 2017.

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Sub-indices

Three of the thirteen sub-indices that make up the composite Sacci BCI had a positive monthly impact in March 2018. Four sub-indices were unchanged and six were negative month-on-month.

Increased merchandise export volumes, lower real financing cost, and lower consumer inflation made the largest positive monthly contributions to the business climate. Less merchandise import volumes, lower real retail sales growth, and subdued real value of building plans made the most notable negative monthly contributions in March 2016 to the business climate.
 
The continued year-on-year improvement of the BCI in March 2018 was the result of an uptick in eight of the 13 sub-indices, and two that were unmoved.

One of the six financial sub-indices had an annual negative impact on the BCI, while two activity sub-indices had negative annual effects on the BCI in March 2018. The largest positive annual contributions to the business climate were from lower inflation, increased merchandise import volumes, and new vehicle sales.

"The business and economic climate remained favourable in the first few months of 2018 and there was a serious attempt to eradicate the most obvious maladministration and financial mismanagement in the public sector. More certainty has to be obtained to bring fixed investment and the economy onto a healthy platform for growth," said Sacci.
 
"Although there is greater hope for economic policy certainty and a pivotal role for the business, the current positive climate and momentum of business confidence should be supplemented by tangible results."

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