The SA Chamber of Commerce and Industry (Sacci) business confidence index (BCI) declined to 93.0 points in May from 93.7 in April, one index point below the same period in 2018, as well as below market expectations.

May’s figure is also below the five-month average of 93.4 points, and below the average 95.5  seen throughout the course of 2018, Sacci said in a statement on Wednesday.

PODCAST: Sunday Times Politics Weekly - “The President owes us an explanation”

Subscribe: iono.fm | Spotify | Apple Podcast | Pocket Casts | Player.fm

Four of the 13 sub-indices improved, including energy supply; increased merchandise export volumes; lower consumer price inflation; and increased real credit extension to the private sector. Eight sub-indices decreased and one remained unchanged. 

Sacci said the year-on-year decline in the BCI was mainly due to the investment- and trade-weighted rand that depreciated against the dollar and other major currencies; the drop in the JSE’s all share, which reached a seven-month low; the lower real value of building plans passed; as well as the decline in new vehicle and retail sales.

Sacci chief economist Richard Downing speaks to Business Day TV about the decline in business confidence.

A Bloomberg poll of four analysts expected the BCI to rise to 94.0 points for May. 

May also saw the ANC secure a majority win of 57.5% in the general elections, a victory that some investors and analysts deemed market-friendly. The outcome raised hopes that President Cyril Ramaphosa will be able to execute his promised economic reforms. 

“There is an air of optimism as stakeholders seem prepared to give Ramaphosa an opportunity to deliver on his promises, coupled by his commitment to drive performance, and to be held personally accountable. This bodes well for business confidence, although time will tell if, indeed, words translate into action and results,” the statement read.

Subdued global economic activity has caused SA’s growth momentum to subside, Sacci said, despite hope that the newly elected government will help provide a better business environment.