Business confidence improved in February, according to the business confidence index (BCI) released by the South African Chamber of Commerce and Industry (Sacci) on Wednesday.
The BCI increased by 1,8 index points between January and February 2010, registering 83 in February 2010.
This was 1,5 points below the February 2009 level.
“The BCI has performed as expected in February 2010 with business confidence responding to positive medium-term economic developments,” Sacci said.
Despite fewer sub-indices having a positive impact on the BCI in February 2010 than in January 2010, lower liquidations data and increased manufacturing output had a significant impact, Sacci added.
However, the negative influence of international trade through both import and export volumes continued to weigh on the local business environment, it said.
On a year-on-year basis, eight sub-indices had a positive impact on the BCI in February 2010 — two more than in January 2010.
The additional positive contributions in February came from sub-indices on real economic activity, suggesting enhanced levels for the BCI in 2010, Sacci said.
In February, a number of major events and announcements supported greater economic optimism, but there were also a number of factors that contributed to uncertainty or the possibility of unintended outcomes over the medium term, Sacci added.
“Service delivery as prioritised by the president in his State of the Nation address is essential in ensuring fiscal discipline and value for budgeted allocations.
“Debt-servicing cost will cause a significant shift in functional expenditure towards the category general public services over the next three years, unfortunately at the expense of mainly economic services.”
Sacci said fourth quarter 2009 gross domestic product data indicated that although the volume of goods and services produced was still 1,4% less than a year ago, the turnaround that started in the third quarter 2009 was gathering momentum.
Unintended economic consequences would emerge as the relative price of electricity and its share of costs to business and consumer expenditure changed substantially, Sacci added.
“Business confidence would have received stronger support if the approach to electricity supply and pricing had been appropriately managed over the longer term.” — Sapa