The Business Confidence Index (BCI) was reflecting a stable business mood, having fluctuated by 0,6 index points over the past four months, the SA Chamber of Business (Sacob) said on Tuesday.
”The advantageous financial environment that gave rise to the higher level of business confidence is still in support of the business mood, but seems to have reached its limits,” Sacob economist Richard Downing said in a statement.
The BCI for November was at 126,5 index points, up from 126 in October.
Downing said the public sector needed to invest more money in order to gear up for a sustainable six percent economic growth rate and raise business confidence to more advanced levels.
”Bottlenecks are already emerging in public services and at the current growth rate of around five percent, with capital stock — a country’s asset base, including roads, rolling stock and power stations — that cannot accommodate such a growth rate, we can expect such disruptions to increase,” Downing said.
He expressed concern that with ailing levels of capital stock the country’s infrastructure could deteriorate faster than was normal if the situation was not given urgent attention.
He said disruptions in services, such as the recent power outages in Cape Town, were ”definitely not” contributing to the efficiency of business, also given that South Africa was competing in international markets.
”Business should have an environment that is reasonable,” Downing said.
It was comforting to see that manufacturing output experienced increasing growth throughout 2005. General government services, electricity and water provision registered a low growth during this period.
The chamber urged policy decisions to be based on the extent to which they contribute to efficient service delivery, the success of business, improved returns for investors, economic growth and poverty alleviation.
The BCI is calculated from movements in 13 sub-indices which include vehicle sales, real retail sales and building activity, exports, imports and inflation.
In September last year, the BCI, aided by low inflation, the rand’s strength and a surge in consumer spending, reached a record level of 130,9 index points. The BCI for September 2005 was 125,9. – Sapa