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PRESS RELEASE- BUSINESS CONFIDENCE INDEX
Business Confidence Turns Positive
Between November and December 2011, the SACCI Business Confidence Index (BCI) increased meaningfully for the first time in 2011 since its current decline began in April 2011. The December 2011 upturn follows the significant easing of the decline phase in November 2011. The BCI increased by 1.7 index points from 97.4 in November 2011 to 99.1 in December 2011 but was still 4.2 points below the December 2010 level.
In December 2011 the SACCI BCI was still well below the all-time high of 122.1 recorded in December 2006. In 2006, the BCI measured its best annual average of 119 since the BCI’s commencement in 1985. The annual improvement in 2011 to 100.4 was relatively benign compared to the BCI average of 100.0 for 2010 from 97.7 in 2009. The protracted nature of the recovery is contextualised against the business cycle trough being reached in August 2009.
The positive change in the BCI between November 2011 and December 2011 was determined by ten sub-indices being either positive or unchanged. On an annual basis, the real economy components of the BCI became more positive in December 2011 with improvements in five of the seven real economy sub-indices. The financial environment was stable when compared to December 2010 with an even spread between positive and negative movements in the sub-indices.
The economic slowdown in the euro area continued to impact adversely on global growth and confidence and the worsening debt crisis constrained the options for response to the crisis. However, the state of the global economy will on balance continue to have negative effects on business confidence in 2012.
South Africa’s economic performance largely hinges on consumption expenditure by households and the general government. SACCI is concerned that the rate of fixed capital spending is below what is needed to accumulate appropriate capital stock for sustainable higher real economic growth.
Businesses face a difficult and uncertain environment in the next twelve months, but domestic economic and socio-political stability could assist in securing positive business sentiment. The delivery of utility services (a sub-index to the BCI) shows promising signs of stabilising - albeit at a low level. More effort to improve the business environment at municipal level may be a good starting point in nurturing business confidence.
Source - SACCI
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