The SACOB Business Confidence Index, BCI, reached a new record level of 110,9 in August, the SA Chamber of Business said on Thursday.
The previous highest level for the BCI was registered in February 2001 when it measured 110,6. Last month the BCI was at a level of 108 and is currently 6,1 index points above last year’s August level.
”Nine sub-indices were in positive territory, one remained fairly neutral while three sub-indices restrained the BCI,” SACOB said in a statement.
According to SACOB the strong showing of the BCI also stands in contrast to the overall less optimistic economic growth prospects.
Annualised economic growth for the second quarter of 2003 stalled to a five year low, coming in at 1,1%. This level was much lower than most expectations.
There are signs that economic growth could accelerate in the second half of 2003, although growth projections for 2003 made at the beginning of the year will not be met with the second quarter’s weak performance following on the disappointing first quarter.
In comparison, the inflation picture looks more promising. General inflationary pressures continue to soften and remain in check, as illustrated by the lower levels in consumer inflation.
However, SACOB feels that monetary constraints on business and consumers still remain fairly tight and the business body is calling for a further drop in interest rates before year-end, to ease these monetary constraints and to bring real interest rates down to comparable levels with South Africa’s peer group of countries.
SACOB concurs with prevailing views that accelerated economic growth is a pre-requisite if unemployment is to be halved by 20% in 2015 as was envisaged at the Growth and Development Summit in June 2003.
Therefore SACOB supports the principles of the Brenthurst initiative, launched in early August, which advocates a strategy of transformation in accord with a robust growth-orientated economy.
SACOB feels that the overall economic environment and business prospects in the main will remain subject to uncertainty about economic growth prospects for the remainder of 2003.
A further easing of the financial environment combined with lower inflation levels and hopefully a global economic recovery in the near future might result in more positive signs of stronger growth in the remainder of 2003 into 2004. ‒ Sapa