How SA’s business confidence increased since height of the Covid-19 pandemic

Business confidence has increased in the first quarter from an unchanged 43 points in the fourth quarter to 46, almost at the neutral 50 mark of the second half of last year.

New vehicle dealers, wholesale and manufacturing all showed an improvement.

According to the RMB/BER Business Confidence Index (BCI), the 46 points is encouraging as it equals the BCI’s long-term average.

It is also very different from the low of five at the height of the Covid-19 pandemic in 2020.

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The survey was done between 9 and 28 February among 1,300 senior executives in the building, manufacturing, retail, wholesale and motor trade sectors, primarily with questionnaires submitted before Russia invaded Ukraine, the oil price surged and stage 4 load shedding returned.

New vehicle dealers registered the biggest increase after declining from 47 to 41 in the fourth quarter of last year.

Sentiment recovered to 54 in the first quarter. Improved supply helped to increase sales, but dealers said they could not satisfy demand completely because stocks were below satisfactory levels.

Confidence in the wholesale sector increased slightly 57. Although sales of consumer goods were weaker, sales of non-consumer goods, such as machinery and chemicals, were boosted by favourable conditions in the agricultural and mining sectors.

Business confidence in the manufacturing sector also improved, with its points jumping from 38 to 43 thanks to strong domestic sales and exports. However, production could have increased even more, but was affected by ongoing supply chain bottlenecks and shortages of key inputs.

On the downside, business confidence among retailers declined from 52 to 49, while confidence for building contractors decreased to 25. Retailers of non-durable goods lost the most confidence as sales decreased due to rising inflation.

Higher-income earners moved their spending to take-aways and dining out instead of at-home consumption and entertainment.

It also seems that sales of durable goods, such as hardware and building materials that were until now driven by work-from-home additions and renovations, have peaked, while sales of furniture, appliances and electronic equipment continued its strong performance and sales of semi-durable goods, such as clothing and footwear are making a comeback.

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