Business confidence falls in January

Business confidence fell to its lowest level since May 2010, the South African Chamber of Commerce and Industry (SACCI) said.

Releasing its January Business Confidence Index (BCI), SACCI said the index dipped to 97.1 after increasing by 1.7 points in December to 99.1.

“This is the lowest level for the BCI since May 2010 when the BCI registered 96.7. The January 2012 BCI is 6 index points below the January 2011 level,” said SACCI.

The decline is due to six of the sub-indices being negative, compared to only three sub-indices reading negative in December 2011.

“The financial environment was supportive of positive business sentiment, with five of the six financial sub-indices being either positive or neutral. Only two of the seven sub-indices in the real sphere of the economy had a positive impact on the BCI between January 2012 and December 2011.”

On an annual basis, fewer sub-indices were negative although the sub-indices reflecting the financial environment were less favourable than in December 2011.

“The impact on the BCI from inflation, share prices and the exchange rate of the rand, however, could be more positive in 2012 than was the case in 2011,” noted SACCI.

The real economy may experience more challenging times ahead as the low growth scenario in 2012 will impact negatively on real economic activity.

Lower economic growth, unemployment, higher inflation and weak municipal service delivery are some of the various challenges that could cloud the economic and business outlook for the year.

“The upcoming State of the National Address and National Budget provide the opportunity to bring about improvements. Both should promote policy consistency in the public sector, commitment and coherency in all government spheres, and lead to enhancements in the business environment,” said SACCI.