2 minute read
9 Sep 2014
12:13 pm

Business Confidence increases

Business confidence in the third quarter of 2014 rose by five points, Rand Merchant Bank (RMB) and the Bureau for Economic Research (BER) said on Tuesday.

Image courtesy stock.xchnge (KillR-B)

The RMB/BER Business Confidence Index (BCI) increased to 46 points, from 41 in the second quarter.

“This is the first noticeable rise in over a year and it implies that just shy of five in every 10 respondents rated prevailing business conditions as satisfactory,” RMB said in a statement.

“The rise in the RMB/BER BCI mirrors an improvement in sentiment in all the sectors making up the headline index, except for the new vehicle trade.”

The RMB/BER BCI is based on a survey conducted among 2300 companies between August 4 and September 2.

The BCI measures business confidence on a scale of zero to 100, where zero indicates an extreme lack of confidence, 50 neutrality and 100 extreme confidence.

Retailers’ confidence increased to 60 points, from 49.

“This is the first time in two-and-a-half years that confidence is back in net positive terrain,” RMB said.

“The improvement in sentiment is notable as sales volumes did not increase across all categories – clothing and hardware rebounded strongly, while food and furniture sales volumes deteriorated.”

The confidence of wholesalers increased from 44 to 59 index points.

“Unlike a diverse sales performance among retailers, wholesalers’ sales improved all-round,” RMB said.

“Sales of non-consumer goods (such as machinery, chemicals and building materials) benefited greatly from the end of the strikes in mining and manufacturing, as well as from the return to higher activity levels in the residential building sector.”

The confidence of building contractors increased from 45 to 53.

“This is the first time since the 2008 recession that this index is above the 50 neutral mark,” the bank said.

“Whereas residential building activity put in a strong performance in the third quarter, non-residential activity stagnated.”

Manufacturing confidence increased marginally from 25 to 28 index points.

“While both export and domestic sales volumes improved, levels are still much lower than they were at the beginning of the year,” RMB said.

“Further declines in sales dampened new vehicle dealers’ business mood. At 28, confidence fell to the same low level as in the first quarter, rendering the second quarter’s jump to 43 a temporary blip.”

RMB said the BCI pointed to further economic growth in the second half of the year.

“This is encouraging as only a short period ago some commentators were still worried about a possible recession.”

The economy declined by 0.6 percent in the first quarter of the year, followed by an increase 0.6 in the second quarter.

A recession is defined as two consecutive quarters of negative growth.