It is a bleak end to the year, with business
confidence hitting a five-year low and no sign of South Africa’s depressed
economy lifting soon. Costs are also rising.
The Rand Merchant
Bank/Bureau for Economic Research business confidence index, released on
Thursday, fell two points to 36 in the fourth quarter from 38 in the
third.
It is down 15 points for the year. This is despite an easing of load shedding.
New vehicle dealers, the construction sector and wholesalers suffered a drop in confidence, while only retailers were slightly upbeat. Manufacturers’ confidence was unchanged.
The survey was done before last week’s interest rates hike, so it could have been worse.
Low business confidence points to a decreased likelihood of investments and job creation, lobby group Business Unity SA’s director for economic and trade policy, Olivier Serrão, said.
"In general, a stable macroeconomic and fiscal environment, as well as policy and labour stability, contribute to business confidence, as do favourable global economic and trading conditions," he said.
The confidence index suggested that economic growth slowed further in the fourth quarter compared to last year, RMB chief economist Ettienne Le Roux said.
He said growth of about 1% to 1.5% seemed most probable for this year. The economy grew a mere 0.7% in the third quarter after contracting 1.3% in the second quarter.
Policy uncertainty, declining profitability and rising costs for companies were among factors that would possibly keep spending on fixed investments by the private sector benign in future, MMI economist Sanisha Packirisamy said yesterday.
The plunge in business confidence is worsened by higher producer prices.
The producer price index rose sharply and by a higher-than-expected 4.2% in October compared to a year ago.
That was its fastest pace of acceleration since December last year.
The rise in producer inflation reflected rising food prices mainly due to the drought, Statistics South Africa data showed.
The Rand Merchant
Bank/Bureau for Economic Research business confidence index, released on
Thursday, fell two points to 36 in the fourth quarter from 38 in the
third.It is down 15 points for the year. This is despite an easing of load shedding.
New vehicle dealers, the construction sector and wholesalers suffered a drop in confidence, while only retailers were slightly upbeat. Manufacturers’ confidence was unchanged.
Low business confidence points to a decreased likelihood of investments and job creation, lobby group Business Unity SA’s director for economic and trade policy, Olivier Serrão, said.
"In general, a stable macroeconomic and fiscal environment, as well as policy and labour stability, contribute to business confidence, as do favourable global economic and trading conditions," he said.
The confidence index suggested that economic growth slowed further in the fourth quarter compared to last year, RMB chief economist Ettienne Le Roux said.
He said growth of about 1% to 1.5% seemed most probable for this year. The economy grew a mere 0.7% in the third quarter after contracting 1.3% in the second quarter.
Policy uncertainty, declining profitability and rising costs for companies were among factors that would possibly keep spending on fixed investments by the private sector benign in future, MMI economist Sanisha Packirisamy said yesterday.
The plunge in business confidence is worsened by higher producer prices.
The producer price index rose sharply and by a higher-than-expected 4.2% in October compared to a year ago.
That was its fastest pace of acceleration since December last year.
The rise in producer inflation reflected rising food prices mainly due to the drought, Statistics South Africa data showed.
No comments:
Post a Comment