The South African Chamber of Business (Sacob) on Tuesday announced that the figure recorded for its Business Confidence Index (BCI) in November represented an all-time high.
The figure recorded was 103,2, the highest since a previous level of 103,1 was registered in April 2006.
”This is a new all-time high and although the October BCI improvement was regarded as temporary, it now seems to have had more substance,” Sacob said in a statement.
Sacob said this month’s surge in confidence was largely driven by the intensity of unprecedented credit extension, the rand recovery and international price movements that pushed domestic expenditure, borrowing, imports, precious-metal prices, new vehicle sales and the JSE.
In contrast to October 2006 (where eight of the 13 sub-indices made a negative impact), 10 sub-indices had a positive effect on the BCI in November 2006. Only three sub-indices had a negative influence in November compared with eight in October — ensuring a more positive business mood.
Sacob added that new and revised data — made available during November 2006 — suggested that real economic growth was about 0,3 percentage points stronger than previously indicated.
This benefited the business mood despite the fact that real economic growth slowed from 6,1% in the first quarter of 2005 to 4,5% in the third quarter of 2006.
Although the rand recovered in November, Sacob said cost effects of the weaker rand will continue to affect producer inflation and will play a pivotal role in price stability over the next year.
According to Sacob, business confidence can be enhanced and secured at the level recorded in November 2006 if economic growth becomes broader-based and the facilitation of borrowing becomes commensurate with sustainable real economic developments.
These developments will have to be at debt levels defined by sound debt-service parameters.
The tightening of monetary policy and a possible correction taking place could see more discipline emerging in credit extension and borrowing behaviour, said Sacob. — Sapa