SACCI’s Business Confidence Index (BCI) declined slightly by 0.3 from 91.4 in September to 91.1 in October 2013. It is only the second time in the last six months that the BCI was above the level of 91 index points. The October 2013 BCI was 0.9 index points below the level of October 2012 and 8.9 index points below the 100 for the 2010 base year. Not much deterioration but not much sign of excitement either. What do our experts think?
Mike Schussler from economists.co.za:
I think the flatness of the BCI is a good sign, as the economy does seem to be a bit more resilient in October than September – and the fact that things did not get worse (some BCI parts are actually still September data) indicates that once the major strike action is over we will see more economic growth again. But it is still at low levels and the real recovery has yet to gain any form of possibility. Three negative and four positive components, with others seen as neutral, is at least slightly more positive than in the September BCI. SA however has a long way to go before we can really call this bad period which has been going since Marikana and Implats (in Feb 2012) truly over. I believe we will see the light – but that may only be a few months after the elections. Everyone seems in a holding pattern at present. The real hard decisions are unlikely to be made before 2nd half 2014.
Independent Economist Ian Cruickshanks:
The index remains at a low level. Not much has changed in the last few months. With such a tentative outlook, with concern about labour disputes, this says the level of activity in business leads little to believe there will be an acceleration in the business climate in the short term, with little prospect of much new fixed capital investment. There is a big contrast between this index and the stock market.
SACCI is concerned that the ongoing labour disputes and disruptions of business, as well as the risks to South Africa’s sovereign ratings, are a continual weight on an already tentative business climate. Lingering economic challenges in some of the larger economies of the world also contributed to the tentative business climate resulting in low business and investor confidence.
Business is lacking in confidence and one knows what could be done to improve this, with government creating a more welcoming climate for business. That, though, does not appear very likely.
Tweets of the Day:
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