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We take a look at the latest business confidence index numbers as sponsored by Rand Merchant Bank (RMB) and conducted and calculated by the Bureau for Economic Research
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Consumer confidence in SA is fading. And it has good reason.
South Africa is between a rock and a hard place. It has large scale corruption, violent crimes, general lawlessness, polarizing electioneering taking place before the general elections, ESKOM's woes and loadshedding. It's economy isn't growing, more and more youth in SA find themselves as part of NEET (not in employment education or training) and the sluggish economy just isn't creating enough jobs for the masses of unemployed. Political infighting in the ruling party is creating policy uncertainty and this creates an unfavourable environment for businesses to operate in. So what does the latest RMB/BER business confidence index tell us about business confidence in South Africa. Below the latest business confidence index press release released by the BER.
The RMB/BER Business Confidence Index (BCI) flatlined at a worryingly low 28 in the second quarter. More than seven out of ten respondents therefore remained unsatisfied with current business conditions. The last time sentiment was this gloomy was two years ago, and before that, during the global financial-crisis-induced 2009 recession.
RMB/BER business confidence index
Details Sentiment improved in the building, retail and wholesale trade. Yet, improvements on balance were marginal and fully offset by a renewed sharp drop in the confidence of new vehicle dealers while the confidence of manufacturers slid even further
RMB/BER business confidence index per industry over time
Building sentiment improved by seven index points to a still low 30 – a level that remains consistent with an absolute scarcity of new work.
• Retail confidence rose by a modest four points from 24 to 28 in the second quarter. Sales volumes remained weak across the spectrum of retailers. • Wholesale confidence rose by two points, but at 42, it is still markedly lower than the 56 of just a year ago.
• Offsetting these increases was a further three-point drop to 22 in the BCI of manufacturers, while motor trade confidence reversed almost all the first quarter gains by falling back to 17.
A standout from the second quarter BER survey results was the ongoing worsening in business activity from an already depressed level. Domestic sales volumes deteriorated in each of the five sectors, with the drop-off particularly noticeable in the case of manufacturers, retailers and new vehicle dealers. Striking too is the difficulty many respondents continue to have in passing higher costs on to consumers – a not entirely surprising outcome given the persistent weakness in domestic expenditure. Insufficient demand, for example, hampered as much as 76% of building contractors and 70% of manufacturers’ current activities. A small rebound in manufacturing exports from quite weak first quarter levels was a rare positive in an otherwise clearly downbeat second quarter business confidence release
• Retail confidence rose by a modest four points from 24 to 28 in the second quarter. Sales volumes remained weak across the spectrum of retailers. • Wholesale confidence rose by two points, but at 42, it is still markedly lower than the 56 of just a year ago.
• Offsetting these increases was a further three-point drop to 22 in the BCI of manufacturers, while motor trade confidence reversed almost all the first quarter gains by falling back to 17.
A standout from the second quarter BER survey results was the ongoing worsening in business activity from an already depressed level. Domestic sales volumes deteriorated in each of the five sectors, with the drop-off particularly noticeable in the case of manufacturers, retailers and new vehicle dealers. Striking too is the difficulty many respondents continue to have in passing higher costs on to consumers – a not entirely surprising outcome given the persistent weakness in domestic expenditure. Insufficient demand, for example, hampered as much as 76% of building contractors and 70% of manufacturers’ current activities. A small rebound in manufacturing exports from quite weak first quarter levels was a rare positive in an otherwise clearly downbeat second quarter business confidence release