Business confidence recedes

The SA Chamber of Commerce and Industry’s Business Confidence Index (BCI) for March declined by 3.8 index points to 95.7 after rising by 2.4 points in February 2012, the body said.

“The March 2012 reading is the worst since March 2009, when the BCI stood at 93.1,” it said. 

SACCI said in March 2009, however, the business cycle was in a downward phase toward a trough in December 2009. The BCI was 8.5 points below the level of March 2011 after a year-on-year decline of 2.4 points in February 2012. 

“The global uncertainty, coupled with a tentative local outlook, contributed to all sub-indices being either negative or neutral on a monthly basis,” said SACCI. 

It said three of the six financial sub-indices were negative and three were neutral on a month-on-month basis in March 2012, thus echoing restraint in the business mood.  The real economic environment was also biased towards the negative from February to March 2012, with all of the seven sub-indices being negative or neutral.  

A negative picture also emerged from the annual year-on-year comparison in March 2012.  Nine sub-indices made less of a contribution than a year ago, compared to only four sub-indices being negative in February.  

Only one real economic sub-index (utility services) and two financial sub-indices (real financing cost and metals prices) made positive contributions (y/y) to the BCI in March 2012.

SACCI suggested that promoting a greater focus on the investment side of the economy and shifting resources away from the consumption side, could result in the creation and maintenance of economic assets. That, complimented by skilled human capital, would secure a more optimistic and less volatile business mood.