Business confidence dropped in October after rallying for the previous five months, the South African Chamber of Commerce and Industry (Sacci) said on Wednesday.
Its business confidence index (BCI) dropped 1,9 points to 85,9 in October 2010, Sacci said in a statement.
The BCI had improved 5,8 points from May to September 2010.
“Sacci is concerned that important contributors to real economic activity, such as retail and manufacturing volumes, recently lost momentum on a month-on-month basis.”
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When compared with October 2009, seven sub-indices of the BCI improved in October 2010, compared with 10 sub-indices that improved in September 2010 year-on-year.
“In times of economic reticence, the business confidence index becomes more vulnerable to signals from the global business environment,” Sacci said. “Factors that brought to bear on the index include the strong rand, the continued inflow of excess global short-term funds, volatility in export volumes, the vulnerability of the export mix to commodity price fluctuations and demand instability.”
Sacci said last week’s medium-term budget policy statement “brought a degree of clarity on government macro-economic policy”.
“However, given the recent record of service delivery performance by the government, business will cautiously await the outcomes of policy and fiscal commitments.
“Improvements in business confidence can only be inspired by credible outcomes that support the business environment on a sustainable basis.” — Sapa