Business confidence has plunged to a 15-year low, providing a further indication that the country is in a recessionary state.
Persisting pessimism among businesses normally translates into less investment in the economy and raises the likelihood of job losses.
The South
African Chamber of Commerce and Industry (Sacci) Business Confidence
index, the Markit/Standard Bank Purchasing Managers’ index (PMI), and
the Bureau for Economic Research (BER) Manufacturing Business Confidence
index were all under pressure last month, data showed on Thursday.
Business confidence fell 5.7 index points to 82.7, reaching a 15-year low, the Sacci index showed.
Lefika Securities economist Colen Garrow said on Thursday the depressing figures served as confirmation that the economy was in a recessionary state.
Although the PMI is at a six-month high of 49.6 points, showing an improvement in business conditions for the private sector, the index remains below 50.
Stabilising new orders and employment levels have been cited for the PMI improvement after being dragged down by months of contraction and sluggish output.
The PMI is a survey of 400 private sector executives, canvasing their views about business conditions including new orders, employment and input prices.
Few job cuts are being reported, but input costs are rising because of higher salaries and purchase prices. This has forced companies to raise selling prices.
Standard Bank economist Kuvasha Naidoo said: "Higher input prices in general are expected to squeeze manufacturers’ margins. Notably, firms continued to pass on higher costs … as reflected by the rise in output price inflation to a six-month high."
Adding to manufacturers’ woes is the fact that new export orders are contracting, indicating poor demand. The last time new export orders showed positive signs of health was last December, according to Standard Bank.
The BER’s index is stable at 34 points this quarter, but this is more than 10 points below the long-term average and eight points lower than the figure recorded in the fourth quarter of last year.
Six out of 10 manufacturers are unsatisfied with business conditions, the index shows. Low confidence normally manifests in poor manufacturing growth, and this does not bode well for the economy because manufacturing is a large contributor to gross domestic product.
Weak demand and low commodity prices have been cited for weighing down manufacturing.
"Overall, the survey suggests that the sector is unlikely to sustain its recent rebound. In fact, despite the absence of load shedding, growth could be weaker in the final quarter of the year compared to the third quarter," the BER said.
Persisting pessimism among businesses normally translates into less investment in the economy and raises the likelihood of job losses.
Business confidence fell 5.7 index points to 82.7, reaching a 15-year low, the Sacci index showed.
Lefika Securities economist Colen Garrow said on Thursday the depressing figures served as confirmation that the economy was in a recessionary state.
Although the PMI is at a six-month high of 49.6 points, showing an improvement in business conditions for the private sector, the index remains below 50.
Stabilising new orders and employment levels have been cited for the PMI improvement after being dragged down by months of contraction and sluggish output.
The PMI is a survey of 400 private sector executives, canvasing their views about business conditions including new orders, employment and input prices.
Few job cuts are being reported, but input costs are rising because of higher salaries and purchase prices. This has forced companies to raise selling prices.
Standard Bank economist Kuvasha Naidoo said: "Higher input prices in general are expected to squeeze manufacturers’ margins. Notably, firms continued to pass on higher costs … as reflected by the rise in output price inflation to a six-month high."
Adding to manufacturers’ woes is the fact that new export orders are contracting, indicating poor demand. The last time new export orders showed positive signs of health was last December, according to Standard Bank.
The BER’s index is stable at 34 points this quarter, but this is more than 10 points below the long-term average and eight points lower than the figure recorded in the fourth quarter of last year.
Six out of 10 manufacturers are unsatisfied with business conditions, the index shows. Low confidence normally manifests in poor manufacturing growth, and this does not bode well for the economy because manufacturing is a large contributor to gross domestic product.
Weak demand and low commodity prices have been cited for weighing down manufacturing.
"Overall, the survey suggests that the sector is unlikely to sustain its recent rebound. In fact, despite the absence of load shedding, growth could be weaker in the final quarter of the year compared to the third quarter," the BER said.
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