July business confidence shows improvement

BUSINESS was slightly more confident in July, ahead of the municipal elections, the latest index from the SA Chamber of Commerce and Industry (Sacci) shows.

The July Business Confidence index (BCI) improved to 96 points compared with 95.1 in June. However, year on year, it was 5.8 index points lower.

“The turnaround of the BCI in June and July might have stemmed the declining tide and led to further improvements in business confidence.”

Sacci said on Monday that there were marginally less impediments in the real business environment in July compared with June, with five of the seven subindices improving month on month.

The month-on-month financial climate also improved with three subindices improving in July, two remaining unchanged and one declining.

However, the “annual BCI comparison does not indicate any material change in the subdued business climate in the real economy or the tight financial environment of a year ago”.

The main monthly positive contributions to the BCI were due to the rand exchange rate, merchandise export volumes, real retail sales and the US dollar/gold and platinum price.

Building plans passed, new vehicle sales and inflation had the largest negative monthly effects in July.

The year-on-year change in the business climate paused in July with three subindices making positive contributions to the BCI, the same as in June. Ten subindices made negative year-on-year contributions in July. Two of the seven real activity subindices and one of the six financial subindices had positive impacts.

The foreign sector subindices, in particular, had positive year-on-year impacts on the BCI in July as reflected by merchandise export volumes and the gold and platinum prices.

Restricted climate

But Sacci said the financial environment continued to restrict business climate with only precious metal prices that improved.

It noted South Africa experienced stronger merchandise export trade in June and July, while the rand gained more than 10percent on a weighted rand exchange rate against the dollar, the pound and the euro, which is healthy.

Yet, it was concerned that the International Monetary Fund and the Reserve Bank had lowered South Africa’s economic growth projections. Go to www.busrep.co.za for on day news.