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Business Confidence Index shows signs of improvement

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Business Confidence Index (BCI) in South Africa is showing signs of improvement. The latest data from the South African Chamber of Commerce and Industry (Sacci) shows an improvement despite a slight decline in the previous month.

February’s business confidence was 98,9  after recording a relative high level of 99,7 in January. The BCI for February 2018 is 3,4 index points higher than a year ago and has kept to levels above 95 since November 2017.

Sacci says the direction of various business climate indicators is still positive although the pace of improvement has slowed from the exceptional positive mood in December 2018 and January 2018.

“The Sacci Business Confidence Index pulled back a little bit from its high levels that were achieved in January and we had a lot of positive sentiments during December that pushed up the index to some exceptional levels. So, it’s still positive to some extent,” said Sacci economist Richard Downing.

The data shows that although the present business confidence contains substantial positive sentiment, investment decisions will soon have to become a reality to create sustainable higher economic growth and employment prospects.

Six of the 13 sub-indices that comprise the Sacci, BCI, had a negative monthly impact in February 2018, declining from exceptional improved levels. The annual improvement of the BCI in February 2018 was the result of 10 of 13 sub-indices that improved and two that were unchanged a year ago.

The largest annual positive contributions to the business climate were from lower inflation, improved new vehicle sales and increased manufacturing output.

“11 of the 13 sub-indices were either positive or unchanged and it’s definitely a better position than we had seen in February than last year Feb.”

According to Sacci ,the lower inflation and the stronger rand exchange rate together with a budget indicating government’s resolve to turn back from the fiscal cliff could accommodate an easier monetary policy stance that should further enhance the economic performance over the medium-term.

Greater economic policy and consistency are expected to improve business confidence levels even further.

“I think the budget moved in the right direction and what is critical is to get business confidence going and keep it at its highest levels to keep investment sentiments and confidence.”

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