The South African Chamber of Business’ (Sacob) business confidence index (BCI) increased by 2,2 index points to 103,1 in April this year, Sacob said on Thursday.
Although up from March’s figure of 100,9, it was the same as January’s figure, which Sacob said indicates that the index seems to be finding it difficult to break away to a higher level.
The BCI merely recovered lost ground during this period, Sacob said.
From September 2004 to April this year, the BCI varied by only 3,6 points — moving sideways in a limited range.
“Sentiment has helped to keep business confidence at a relatively high level. South Africa is fortunate that the higher gold price partly offsets immediate difficulties with the high crude oil price,” Sacob said.
The business chamber said it is concerned that the role of gold is less prominent than in the past. “There are marked differences with earlier oil crises and the role of gold. The current oil-price scenario will necessitate a strategic assessment by business.”
Financial-market assessment of the economic environment, Sacob said, remains favourable given the positive sentiments regarding prevailing commodity prices.
“However, more than sentiment and high commodity prices will be needed to maintain business confidence at the present level. If, in addition, consumer confidence and consumer spending retracts from the present high levels, it will contribute to a serious lapse in business confidence,” it added.
Since the easier financial business environment sparked renewed business confidence in the second half of 2003, consumer confidence has led the way and business activity, focusing on consumer spending, has exhibited remarkable vigour, it added. This, however, has not fundamentally affected real activity in the primary and secondary sectors and some “positive” factors for consumers undermine business activity in these sectors.
“Sacob members note with concern that activity and competency levels in some public-sector institutions, and especially local government, are reflected by poor service delivery. There also does not seem to be consistency in corrective action. This state of affairs seriously undermines business confidence.
“The present high oil-price scenario troubles Sacob and the complications will seriously affect business confidence. The recent strong rise in the fuel price and further substantial possible increases highlight the problem. There is a need for strategic preparedness by the private and the public sector if the present high oil-price scenario continues,” Sacob said. — I-Net Bridge