Business confidence is at a delicate stage, with the business confidence index (BCI) virtually unchanged, dropping from 127,5 in March to 127,2 in April, the South African Chamber of Business (Sacob) said on Thursday.
”The status of business confidence reflects a delicate balance at present.
”The financial environment cannot be expected to further facilitate higher levels of business confidence or to contribute to it,” Sacob said
The latest survey showed continuing low inflation; stable but high dollar, gold and platinum prices; high import volumes; and a continuing high real value of building plans.
Some Sacob members regarded the rand as being too strong given the role of financial inflows in threatening the rand’s value.
The organisation also welcomed the move to lower the repo rate, as the cost of borrowing was reduced, but regards the timing as unfortunate.
It believes that business confidence requires an environment of consistency and predictability in policy decisions aimed at enhancing the real growth prospect of the South African economy.
”Extending these conditions into the real economy will provide a major challenge,” it said.
Meanwhile, in the trade conditions survey compiled by Sacob and Standard Bank, April’s index of 51 was an improvement on last year’s April index of 46.
Index values above 50 show improving conditions. This was the first time this year that trade conditions broke through the 50-point level.
The index showed that expectation is also up from last year’s 59 points to this year’s 61 points and is still at a comfortable level.
It also showed overall improvement with trade activity stable, trade expectations optimistic and employment conditions better.
Inflation is, however, still a concern. — Sapa