BCI sees surprise jump in July

Johannesburg– The Business Confidence Index, released by the South African Chamber of Commerce and Industry on Wednesday, surprised with a 3,3 points jump in July to 87,9.

This was after sliding 2,3 points in June to 84,6. The July 2015 level is identical to a year ago. The slight jump comes amid a flurry of negative data and sentiment with consumer confidence at multi-year lows, while new car sales released on Monday showed the biggest drop for the year and the recent interest increase not yet filtering through to actual consumer spending.

“Although the BCI bounced up in July, it did not recover to above the medium-term downward trend of business confidence,” Sacci said in a statement, suggesting that the upward movement was unlikely to be sustained.

Month-on-month changes in the sub-indices of the index were more positive in July 2015 than in June 2015. In June, only one of the 13 sub-indices were positive month on month, nine were negative and three remained unchanged.

In July, the number of building plans passed, export volumes and retail sales were all positive. Vehicle sales, inflation excluding food petrol and non alcoholic beverages as well as the Rand / dollar exchange rate sub indices were unchanged while share prices, real private sector borrowing, real financing costs and precious metal prices were all negative.

The chamber said it “is concerned that the present low domestic economic growth rate is not merely the consequence of cyclical or other short-term factors, but has deeper underlying problems”.

It emphasised the need for “persistent higher economic growth”to solve the country’s problems.

The chamber then made a thinly veiled call for change in economic policy. “Present circumstances provide an opportunity to change direction towards a more normative acceptable policy approach serving longer-term economic growth imperatives,” it said, without noting what such changes might entail.

“In noticing such change, business confidence could turn for the better.”

ANA