Steady Business Confidence

Business Confidence index (BCI) for June 2019

SACCI.jpg

SACCI’s Business Confidence Index (BCI) virtually remained unchanged in June 2019 as it increased marginally by 0.3 index points from 93.0 in May 2019 to 93.3.  The June 2019 BCI level was 0.4 index points below the BCI level of June 2018. This is the lowest index in all the previous June months since 2012. Although it is 7 index points below the benchmark BCI average level of 100 in 2015, it is only 0.2 points lower than the average for 2016. The BCI was launched in 1985 and was at its highest level of 141.2 in December 2006 and was at its lowest of 88.1 in April 1985.

Six of the thirteen sub-indices of the composite BCI improved on their May 2019 levels; three declined and four sub-indices were unchanged. Notable positive monthly effects on the BCI were caused by the number of new vehicle sales, the real value of building plans passed; manufacturing output; and an increase of the all-share price index of the JSE. The year-on-year decline of 0.4 points of the BCI between June 2018 and June 2019 was mainly owing to the BCI sub-indices of lower all-share price index of the JSE; the investment and trade weighted rand that depreciated year-on-year against the US-dollar, British pound and the euro, and merchandise export volumes.

The opposing positive sentiments after the May 2019 national elections which resulted in the election of President Ramaphosa on one hand, and the recent reports of a dire financial strain in most state owned enterprises and municipalities, coupled with the negative Auditor General ‘s latest report of audit findings in most municipalities on the other hand; leaves one with a sense that the two positions are cancelling each other out at this stage when its still too early for realistic business confidence sentiments to develop. What is clear is that all South Africans are expecting decisiveness on the part of government to deal with corruption, incompetence and non-performance, and certainty in urgent implementation of policies to drive economic growth and job creation.    

The present level of business confidence is not at ideal levels and could gain momentum once signs that implementation of set plans and policies is a priority as promised. The upcoming government and private sector driven investment summits and the mid-term budget policy statement later in the year should provide more clarity and detail necessary for businesses to make immediate medium- and long-term investment plans. 

For a full background to this month’s SACCI BCI see the full BCI report on www.sacci.org.za.

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