adminJohannesburg – South Africa’s quarterly business confidence index continued its decline in the second quarter of 2015 as demand fell following a temporary improvement at the start of the year, a survey showed yesterday.
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 index was dragged lower by a drop in confidence among new vehicle dealers and retailers, sectors that had shown improved sentiment in the previous quarter, the report showed, while builders and manufacturers remained pessimistic.
“A lack of demand lies at the heart of the decline in business confidence in the second quarter,” said Ettienne le Roux, chief economist at RMB.
Uncertainty was also increased by an economy made vulnerable by economic policy, labour developments and the escalation of electricity cuts by power utility Eskom, the report noted.
Concern over rising petrol prices and growing jitters of higher electricity tariffs also dented confidence, it said.
The RMB/BER BCI index has hovered below the neutral 50 mark for past five years, consistent with a stagnating economy.
The economy is in the midst of its worst power crunch in seven years, which contributed to slower growth of 1.3 percent in the first quarter.
Meanwhile, The biggest drop in transaction volumes in more than a decade could be an indication that winter has also arrived for the economy, according to an economist.
Latest figures released by BankservAfrica Economic Transaction Index (BETI) show a depressed economy but the year-on-year number is still positive, growing by 1.6 percent in May.
Load shedding has clearly had a disruptive effect, with the almost daily occurrence of power cuts in April and May putting a damper on electronic transactions.
The impact of disruptive electricity supplies and slower world economic growth is distinctly reflected in the numbers, which show the sharpest decline on a quarterly basis since October 2014, and the biggest monthly drop since August 2014.
“With consumer inflation likely to move higher, large increases in the BETI will be unlikely – but it does seem that load shedding is playing a much bigger role at present. If load shedding can be kept to a minimum it is likely that the BETI will at least continue to rise marginally,” said Mike Schussler, chief economist at Economists dotcoza.- Fin24.
derick.khumalo