BUSINESS confidence is at its gloomiest
level in seven years, a survey by Stellenbosch University’s Bureau of
Economic Research (BER) found.
The RMB-sponsored business confidence index fell to 32 points in the second quarter from 36 points in the first quarter, taking its drop over the past year to 11 points.
BER conducted its survey in May, polling 1,700 companies spread across the building, manufacturing, retail, wholesale and motor trade sectors.
A reading of 32 means that about two-thirds of respondents experienced business conditions as unsatisfactory in the second quarter, BER said in its report.
Tuesday’s downbeat business confidence is a bad omen for SA’s gross domestic product (GDP) data, scheduled for release on Wednesday, BER chief economist Ettienne le Roux said in the report.
"The latest survey results are worrying, with the already weak and all-important trade sector showing few, if any, signs of improvement.
"The collapse in retailers' confidence, combined with the continued declines in the sales volumes of new vehicles as well as consumer goods at the wholesale level, suggest as much. The economy is undoubtedly poised for another poor performance this year," Le Roux said.
Retailers led the drop in business confidence, with their component of the index falling sharply by 18 points to 26 in the second quarter.
The report said: "Not even during the global financial crisis-related downturn of 2008 and 2009 have retailers been this downbeat. The sharp decline in confidence can mainly be explained by a drop in turnover; while growth in sales volumes remained weak, many retailers could not sustain increasing their selling prices to the same extent as in the first quarter."
Wholesale confidence held up surprisingly well, declining by only three points to 47. As wholesalers did not have to scale back selling price increases as much as some retailers, growth in turnover only moderated slightly despite continued weak sales volumes. That said, wholesaler confidence could easily take a knock in the future should pricing power wane, BER said.
After climbing from 39 index points in the fourth quarter of 2015 to 43 in the first quarter, confidence among building contractors fell back to 38. The improvement in residential building activity was encouraging, but unfortunately nonresidential building activity contracted at an accelerating pace in the second quarter.
As for the two sectors where confidence improved, increases were small, with both indices remaining at very low levels.
In the case of new vehicle dealers, the BCI rose by only one point to a still depressed 25, as sales volumes continued to decline.
Similarly, while the index for manufacturers increased by five points, at 23 it remained in deep net negative terrain. It would appear that the operating environment for most manufacturers continued to be characterised by poor domestic sales volumes, rising inventories of finished goods and an apparent lack in ability to raise domestic (as well as export) selling prices.
The RMB-sponsored business confidence index fell to 32 points in the second quarter from 36 points in the first quarter, taking its drop over the past year to 11 points.
BER conducted its survey in May, polling 1,700 companies spread across the building, manufacturing, retail, wholesale and motor trade sectors.
A reading of 32 means that about two-thirds of respondents experienced business conditions as unsatisfactory in the second quarter, BER said in its report.
Tuesday’s downbeat business confidence is a bad omen for SA’s gross domestic product (GDP) data, scheduled for release on Wednesday, BER chief economist Ettienne le Roux said in the report.
"The latest survey results are worrying, with the already weak and all-important trade sector showing few, if any, signs of improvement.
"The collapse in retailers' confidence, combined with the continued declines in the sales volumes of new vehicles as well as consumer goods at the wholesale level, suggest as much. The economy is undoubtedly poised for another poor performance this year," Le Roux said.
Retailers led the drop in business confidence, with their component of the index falling sharply by 18 points to 26 in the second quarter.
The report said: "Not even during the global financial crisis-related downturn of 2008 and 2009 have retailers been this downbeat. The sharp decline in confidence can mainly be explained by a drop in turnover; while growth in sales volumes remained weak, many retailers could not sustain increasing their selling prices to the same extent as in the first quarter."
Wholesale confidence held up surprisingly well, declining by only three points to 47. As wholesalers did not have to scale back selling price increases as much as some retailers, growth in turnover only moderated slightly despite continued weak sales volumes. That said, wholesaler confidence could easily take a knock in the future should pricing power wane, BER said.
After climbing from 39 index points in the fourth quarter of 2015 to 43 in the first quarter, confidence among building contractors fell back to 38. The improvement in residential building activity was encouraging, but unfortunately nonresidential building activity contracted at an accelerating pace in the second quarter.
As for the two sectors where confidence improved, increases were small, with both indices remaining at very low levels.
In the case of new vehicle dealers, the BCI rose by only one point to a still depressed 25, as sales volumes continued to decline.
Similarly, while the index for manufacturers increased by five points, at 23 it remained in deep net negative terrain. It would appear that the operating environment for most manufacturers continued to be characterised by poor domestic sales volumes, rising inventories of finished goods and an apparent lack in ability to raise domestic (as well as export) selling prices.
No comments:
Post a Comment