New trade union federation will fail
THEFORMATION of a new trade union federation would fail, Cosatu president Sdumo Dlamini said yesterday. “It will fail, you can give it different names,” he said in Johannesburg, reacting to comments made by suspended Cosatu general secretary Zwelinzima Vavi that he, together with the expelled National Union of Metalworkers were looking into forming a new trade union federation. – ANA A RAFT of surveys released yesterday show business confidence in South Africa is in decline in the second quarter, following a temporary improvement at the start of the year.
The Rand Merchant Bank (RMB) survey, conducted by the Bureau for Economic Research (BER), fell to 43 points in the second quarter from 49 in the previous three months.
The business confidence index (BCI) was dragged lower by new vehicle dealers and retailers, sectors that had shown improved sentiment in the previous quarter, the report shows, while builders and manufacturers remained pessimistic.
“A lack of demand lies at the heart of the decline in business confidence in the second quarter,” Ettienne le Roux, the chief economist at RMB, said.
Uncertainty was also increased by an economy made vulnerable by economic policy, labour developments and the escalation of electricity cuts by Eskom, the report noted.
Ramifications
Concerns over rising petrol prices and higher electricity tariffs had also dented confidence, it said.
The RMB/BER BCI index has hovered below the neutral 50 mark for the past five years, consistent with a stagnating economy.
Bart Stemmet, an analyst at NKC African Economics, said the index had only been in positive territory in four quarters since the start of 2008.
“This goes to show how the… economy has been struggling in recent years as persistent labour issues, slack foreign and domestic demand, tumbling commodity prices, slow structural reform and, most recently, frequent power outages, plagued economic growth,” he said.
Stemmet said unfortunately the future did not look bright either “as we expect GDP (gross domestic product) growth to drift below 3 percent per annum for at least the next two to three years”.
Kamilla Kaplan at Investec said undoubtedly weighing on business sentiment was the uncertain policy environment.
She said in its recent review of South Africa’s sovereign credit rating, Fitch cautioned that “other policy proposals under discussion, such as parts of the mineral resources law, visa regulations, a minimum wage, amendments to the labour law and land reform, could have an adverse effect on growth, if implemented”.
The RMB/BER BCI index points for the second quarter
Kaplan said: “Suppressed business confidence has negative ramifications for investment, employment and economic growth. Indeed… the private sector contracted in the second half of 2014, while meaningful employment creation continues to be absent.”
She said on a broader level, the BCI was considered a leading indicator of the likelihood of expansion or contraction in the economy.
The Merchantec chief executive confidence index recorded a significant decrease from a positive 51.4 in the first quarter to 45.4 in the second quarter.
Merchantec said chief executive confidence relating to the current economic conditions, compared with six months ago, had dropped by a significant 20.8 percent from an already negative score of 40.7 points to 32.2 points, with the largest decrease demonstrated by chief executives in the basic resources sector.