Business confidence index shows improvement in September

The business climate in South Africa showed an improvement in September compared to August, according to the latest Business Confidence Index (BCI) released by the SA Chamber of Commerce and Industry (Sacci) on Wednesday.
The BCI comprises indicators valued by business as critical to their assessment of the business climate. The latest BCI shows that business confidence improved to 93.3 in September 2018 from 90.5 in August 2018.

This after the BCI declined by 4.2 index points in August 2018 compared to July. The BCI for September 2018 was 0.3 index points up on the September 2017 level, mainly the result of increased merchandise export volumes.
According to Sacci, the business climate and SA's economic momentum are still restrained, as a result of the state of the economic and business environment over the past three years.

For the chamber it is important that these adverse conditions are dealt with in preparation of sustainable economic prospects with policy certainty.


Four of the thirteen sub-indices of the composite BCI improved in September compared to August. Five were unchanged and four were negative. In August, meanwhile, three sub-indices improved month-on-month (m/m) and five were unchanged.

In September, merchandise export volumes, new vehicle sales and lower inflation were the most notable positive month-on-month contributors to the BCI. 
Two of the seven real-activity indices made positive year-on-year (y/y) impacts on the BCI in September, while one (real cost of finance) of the six financial sub-indices, had a positive y/y effect on the business climate.

In Sacci's view, the initiatives of the stimulus package announced by President Cyril Ramaphosa should be outlined in more detail over the coming months.

"It remains imperative to create and build institutional capabilities to implement and translate policy, plans and ideas into actual outcomes that can be measured and monitored," Sacci commented.

The chamber said business confidence should benefit from the upcoming mini budget and the Investment and Jobs Summit later this month. These should provide direction and policy clarity. "Hopefully, these can shift SA out of the current technical recession and away from stagflation, which may be very costly and difficult to eradicate once it starts, both in social terms and on the budget deficit," Sacci concluded. 

Bloomberg reported earlier in the month that, based on the separate Rand Merchant Bank and University of Stellenbosch Bureau for Economic Research index, SA business confidence had declined to its lowest level this year in the third quarter "as industries raised concern about policy uncertainty, including about land expropriation".

business confidence graph

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