Business confidence edges up in November

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The SACCI business confidence for October was up to 110.9 index points. Photo: Getty Images
The SACCI business confidence for October was up to 110.9 index points. Photo: Getty Images

BUSINESS


Business confidence ticked up in November and was higher than in the same period last year, according to the SA Chamber of Commerce and Industry (SACCI). The BCI [business confidence index] was 1.4 points higher in November, rallying to 110.6 index points. This was higher by 3.6 points when compared to the same period last year and 2.9 points up on the 2020 number.

The chamber noted that the unexpected performance of business confidence this year was influenced by the disruptions in power supply, among other domestic factors, as well as the main feature in this year’s global economy story, namely: Russia’s war in Ukraine.

The erratic movement of the SACCI BCI in 2022 from a high of 112.0 in February to a low of 103.2 in May – a spread of 8.8 index points – in itself mirrors the risk and uncertainty surrounding the business climate in South Africa during 2022.

Pressures are posed to households in the face of increasing interest rates and the erosion of their disposable incomes and household consumption down 0.3% in the third quarter, even though consumer confidence remained resilient.

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Eight of the fourteen sub-indices monitored had a positive or neutral impact on the BCI between October and November 2022. This comes on the back of GDP data that showed the economy surprisingly grew by 1.6% in the third quarter after contracting in the three months to June.

“Of these eight sub-indices, increased new vehicle sales, share prices on the JSE, and manufacturing output made the largest positive month-to-month impact on the BCI in November. Annually, increased inbound tourism increased new vehicle sales and higher merchandise import volumes had a notable positive effect on the BCI. Import and export volumes both experienced increased activity in the first nine months of 2022 by increasing significantly by 15.9% year-on-year and 9.6% year-on-year, respectively with foreign trade activity thus playing an important role in support of business confidence,” SACCI said in a statement.

Meanwhile, production in the mining sector was down 10.4% year-on-year in October 2022. The platinum group metals weighed on the sector dropping 32.5% and contributing 9.2 percentage points to the decline while gold production was down 6.3% diamonds and manganese production declined 22.5% and 10.5%, respectively.

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The sector, which grew by an overall 2.1% in the third quarter, saw sales grow by only half a percent in October, despite the decline in production in the same month. This is a significant drop from September 21.0% of sales and could be pointing to the extent of the impact on exports on the back of the Transnet strike that hampered activity at the country’s ports in the last quarter of 2022.

Investec economist Lara Hodes said: 

Domestically, persistent, heightened load shedding continues to weigh heavily on the energy-intensive mining sector and remains a key downside risk to the country’s growth potential.

"Specifically, October’s electricity production and consumption numbers published by Stats SA revealed that generation fell by a marked -8.2% year-on-year and by -6.9% month-on-month seasonally adjusted, while electricity distributed declined by -7.5% year-on-year and -7.7% month-on-month.”



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