Expectation of policy change after December lifts business confidence, says Sacci
Sacci says the expectation of changes in domestic economic policy and the performance of the global economy have enhanced the business mood
Business confidence is improving ahead of the ANC elective conference in December, according to the South African Chamber of Commerce and Industry (Sacci)
The Business Confidence Index (BCI) measured 95.1 points in November 2017, up from 92.9 in October. It increased by 1.2 index points compared with the same period a year ago.
Sacci said in a statement released on Wednesday: "The anticipation for changes in domestic economic policy, the performance of the global economy and a probable fresh approach towards business and investor expectations in Southern Africa further enhance the business mood. "
It cautioned: "However, public finance matters and economic growth prospects are important phenomena that have to be attended to urgently."
The average for the BCI in the first 10 months of 2017 was 94.1 compared with 93.4 for the corresponding period of 2016, and 101.2 for the first 10 months of 2015.
Four of the 13 sub-indices of the BCI reflected positive month-on-month movements in the business climate between October 2017 and November 2017, while seven reflected negative changes. The impact of the positive moves, however, outweighed the negative.
"There appears to be optimism beyond the improvement in Sacci’s Business Confidence Index. Economic dynamics in Southern Africa have set in motion the realisation that economic circumstances could improve to serve the broader population," said Sacci.
On Tuesday, the GDP figure for the third quarter indicated that SA may see higher growth than expected. GDP increased by a higher than expected by 2.0% quarter on quarter in the third quarter of 2017.
Despite this, the Standard Bank purchasing managers index (PMI) also released on Tuesday pointed to a further deterioration in business conditions in SA’s private sector in November.
The PMI, which measures the whole economy, registered 48.8 in November 2017 from 49.6 in October, signalling persistently weak business conditions. Readings above the neutral 50 show an expansion in business conditions.
Standard Bank economist Kim Silberman said: "Apart from SA’s economy being characterised by generally weak growth, we note that the rating agency review on November 24 and the upcoming ANC elective conference (December 16–20) will have delayed production and consumption decisions."