Business Confidence Index surprises with a jump in March

In January, business confidence in the country was at its lowest since 1993 as BCI declined by 3.1 index points, slipping back further to 79.6 in December, the lowest level for the BCI in 2015.

SACCI, releasing the BIC in Johannesburg on Thursday, said that it appeared the sharp decline in the BCI from the middle of 2015 to the end of 2015 had been arrested with the BCI hovering above the 80 mark.

SACCI said the BCI had been clawing back some losses and gradually improved in March.

The March BIC showed that the BCI was 7.9 index points below the March 2015 level which was an improvement on the annual difference of 12.7 index points of February.

Four of the seven real activity sub-indices had a positive year-on-year impact on the BCI in March while only one of the six financial sub-indices had a positive year-on-year effect.

SACCI said the largest positive year-on-year and monthly contribution came from merchandise export volumes, merchandise import volumes and share prices. The weighted rand exchange rate made a lesser but also positive contribution in March 2016.

But the Chamber said it was concerned about the higher inflationary expectations notably on input costs of business.

SACCI said it was concerned about consumer and producer inflation which measured 7 percent and 8.1 percent respectively in February, as well as the electricity tariffs increasing by 9.4 percent on top of an increase of 12.8 percent year-on-year.

Food price increases due to the drought and the possibility of raw agricultural produce and staple food imports and the weak rand could be as high as 20 and 25 percent in the medium-term, SACCI said.

This could cause inflation to rise well above the upper target range of the Reserve Bank.

“Given the sluggish growth performance of the world economy and low international commodity prices, the local economy will continue to experience major challenges,” SACCI economist, Richard Downing said. - ANA