Business moves sideways

2014-05-18 15:00

The indices produced by the private sector to gauge the mood of business all point in one direction?–?sideways. This week, the SA Chamber of Commerce and Industry (Sacci) released its latest Business Confidence Index for April.

The results show the business environment was more or less stable from March and was still slightly better than last year. The score for last month was 92.6 versus 92.7 for March. On the Sacci scale, 100 represents conditions in 2010.

The Sacci index does not actually measure business confidence in the traditional sense, but combines a number of “business climate indicators” such as trade statistics, the exchange rate, interest rate, vehicle sales, and the manufacturing and retail numbers published by Statistics South Africa.

South Africa’s major business confidence index, in the sense that this term is normally used, is produced quarterly by the Bureau for Economic Research (BER) and is sponsored by Rand Merchant Bank.

It involves a survey of 2?500 companies asking them if the business environment was satisfactory or unsatisfactory.

The latest RMB/BER index covering the first quarter of this year saw 41% of respondents indicating “unsatisfactory” as opposed to 43% in the previous quarter.

Whenever this number is below 50%, South Africa is said to have a negative business confidence, which BER notes has been the case for about a year now.

But the small drop obscures the massive changes in different sectors. The mood has, however, improved greatly from a dismal base among the manufacturing businesses polled.

Altogether, 41% of them said things were satisfactory when only 36% said so a quarter ago.

A separate survey conducted by lobby group Manufacturing Circle among 54 manufacturing companies came up with a remarkably similar measure of the sector’s mood.

In the last quarter of last year, the group’s survey showed 63% felt business conditions looked “weak or fragile” into this year.

The really bad news from the RMB/BER index was in the trade sectors including vehicle sales, retail and wholesale.

Vehicle dealers’ confidence fell from 41% to just 27%?–reflecting sales figures that were 10.7% lower last month than a year earlier.

Other attempts at measuring the pulse of the private sector indicate that things are getting worse.

The BankserveAfrica Economic Transaction Index (Beti) is another private sector indicator that entails counting the size and volume of bank transactions as a proxy for economic activity.

Bankserv is a clearing house owned by South Africa’s major banks. The latest version of the Beti this week predicted South Africa’s economic growth last month to be a paltry 0.2%.

This is based on the 83.8?million transactions captured, worth R647.4?billion, adjusted for inflation.

A quarterly agribusiness confidence index produced by the Agricultural Business Chamber and the Industrial Development Corporation paints a somewhat different picture for the agricultural sector.

Its latest edition, for the first quarter this year, shows a slight deterioration in confidence, but still pegs the overall optimism at 52.

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