/ 3 April 2013

Business confidence shows slight increase

South Africans are overpowered by debt and reckless creditors have been accused of abusing the system in order to get their money back through mechanisms such as garnishee orders.
Treasury might not accept all other items recommended as this could take a chunk — some R4-billion — out of possible revenue raised, calling for a tough balancing act. (Oupa Nkosi/M&G)

They said on Wednesday the RMB/BER Business Confidence Index increased to 52 in the first quarter of 2013 – a level close to the post-recession peak of 55 registered two years ago. 

The index had remained stable around 46 in the second half of last year.

RMB chief economist Ettienne Le Roux said the first quarter reading implied that only slightly more than half of the respondents in the survey rated prevailing business conditions as satisfactory.

Business confidence rose in four of the five sectors during the first quarter of 2013. Retail was the only sector which showed a deterioration. Confidence among manufacturers rose by four index points to 42.

Le Roux said sales volumes, supported by the weaker rand exchange rate, improved all round. More expensive imports helped to shift demand to locally produced goods, while the competitiveness of domestic exporters also improved.

The rand's weakness might also have contributed to temporary higher levels of confidence in wholesale and new vehicle trade, he said.

Business mood
Fuelled by strong increases in sales volumes, the business mood of wholesalers improved sharply from 57 index points in the fourth quarter of 2012 to 71 in the first quarter of 2013. 

Le Roux said the increased sales volumes of both consumer goods, such as food, clothing, and furniture, and non-consumer goods, such as machinery, building materials, and chemicals, probably stemmed from retailers placing orders to stock up ahead of likely price hikes given the notably weaker rand.

Likewise, manufacturers might have opted to raise stock levels of intermediary goods, such as chemicals, with some even choosing to bring forward investing in new machinery, he said.

New vehicle dealers saw a marked improvement in sentiment as the index jumped by 12 points to 66. "Buying ahead of expected price increases combined with the usual surge in new vehicle purchases early in the year saw a robust rise in sales volumes — an increase which even caught some dealerships off guard," Le Roux said.

Building contractors confidence levels rose from 28 to 30. Retail was the only sector that recorded a deterioration in the business mood.

The index declined from 54 points to 50 in the first quarter, mainly as weaker sales volumes of non-durable goods (food) weighed on confidence.

Sales of semi-durable goods, such as clothing, also deteriorated, while sales of durable goods, such as appliances, electronic goods, and building materials picked up.

Le Roux said the first quarter rise in the RMB/BER BCI was encouraging, but was certainly not overwhelmingly positive.

"To be sure, only around half of the survey respondents are upbeat about current business conditions," he said. – Sapa