Industry chamber says business confidence up in June

2011-07-05 11:16

Business confidence rose slightly in June and improved for the first half of this year compared to last year, the SA Chamber of Commerce and Industry (Sacci) said today.

“The improvement in the first half of the year as compared to the corresponding period of 2010 was quite strong,” Sacci said in a statement.

The business confidence index (BCI) averaged 86.9 in the first half of this year compared to 82.8 in the first half of 2010.

“This improvement must be viewed in the context of weak performance in the first half of last year.

“Notwithstanding the improved average level in the first half of this year relative to last year, business confidence has been on a slight downward trend since the start of this year,” Sacci said.

The BCI for last month was 86.8, up one point from May this year. May’s index was at the lowest level for this year.

In June, five of the 13 sub-indices that make up the BCI declined, while one remained neutral.

“Manufacturing and construction continued to show a lack of direction, while import volumes also reflect tentative domestic circumstances,” Sacci said.
The year-on-year changes in the sub-indices showed that the strength of improvements was weak.

“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 fourth quarter of last year and in the first quarter of this year is welcomed,” Sacci said.

However, the chamber warned that the forces driving the current economic performance were “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.” 

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