Confidence down in Durban

2008-06-26 00:00

Businesses in the eThekwini area are markedly less buoyant about their prospects in 2008, according to the latest business confidence index (BCI), which revealed that the BCI is 68 compared with 81 in 2007.

A value of 50 is indicative of neutrality, 100 indicates extreme confidence, while 0 indicates extreme lack of confidence.

The respondents are involved in retail, wholesale, motor trade, manufacturing, building and construction sectors, among others.

The survey, which emanates from an economic report by University of KZN economist Clive Coetzee, reveals that although most businesses are still fairly positive and confident about the current and future state of business, many are less positive than in previous years.

As expected, most businesses have scaled down their turnover increase expectations.

Only about 45% of respondents expect turnover to increase by more than nine percent in 2008, compared with 61% in 2007.

About 76% of respondents rate the cost of money as a matter of critical importance — a figure that is up by a massive 20 percentage points from 2007.

This is clearly indicative of the higher interest rate environment.

Unsurprisingly, electricity and matters relating to other infrastructure have gained in importance following the frequent episodes of load shedding in the recent past.

The survey was conducted during February and March 2008.

Several fascinating insights have been gained about businesses in the greater Durban area.

Most businesses said they met their profitability objectives in 2007.

Although many businesses appear to be relatively pleased with the current trading conditions, a worrying trend has emerged.

Almost one quarter of businesses now describe current trading conditions as either “poor” or “very poor”, up from only seven percent in 2007.

About 27,5% of businesses expect a “worse” or “much worse” sales performance this year. In 2007, only eight percent of respondents expected a “worse” or “much worse” sales performance.

Interestingly, about 47,3% of businesses plan to expand their operations in 2008. However, it is worth noting that about 10% of respondents plan to downsize.

In addition, more than half of all respondents are currently operating on more than 76% capacity.

On the issue of wage or salary increases, most businesses expect to settle for eight percent (or higher) wage increases. This figure is up by one percent from the 2007 survey.

Another concern to note is that fewer businesses plan to expand their workforce in 2008.

Although slightly less important than in previous surveys, crime remains a key concern for most businesses.

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