The South African Chamber of Business’s (Sacob) Business Confidence Index (BCI) declined to 100,1 in February 2006, Sacob said in a statement on Tuesday.
”The decline of three points between January and February 2006 is the highest monthly decline in the BCI since October 2004, when the index dropped by 3,5 index points,” Sacob said.
The Sacob BCI was reconfigured and rebased during a regular medium-term review, when the base year was changed. The base of the index was changed from 2000 to 2005, which is now set at 100.
”Although the uninspiring data released during February may indicate a once-off occurrence, other developments may be of a lingering nature and could cause structural and linkage breaks in the South African economy,” Sacob said.
The serious decline in merchandise export volumes in January 2006 was of great concern to Sacob, as the current account deficit threatened to reach 6% of GDP.
Some Sacob members had been seriously affected by foreign-trade developments, given that high-commodity prices could disguise the effect on business in general, according to Sacob.
There were indications that the tempo of growth was slowing, and apart from construction, the main growth area remained the tertiary sector, compared with finance, real estate and business services, being the fastest growing sectors in 2005.
Electricity, water services and government services were the weakest performers in 2005, and Sacob deplored the impact of this poor performance, which was having ”devastating consequences” for business in certain regions.
”Business was disappointed with aspects of budget 2006/07. However, Sacob trusts that business will — without preconditions — benefit from the public sector’s capital- and infrastructural-expenditure programme over the next couple of years.”
Sacob hoped the sudden, sharp drop in the BCI was of a short-term nature. Uninspiring data released recently, the budget that did not do much to improve the business mood and public sector service-delivery problems, however, suggest that cracks are appearing which may leave scars on business confidence over the medium-to-longer term, Sacob concluded. — Sapa