Business Confidence Ticks Up From 20-Year Low

Business confidence recovered from 20-year lows in the fourth quarter 2019, the first improvement in two years.

But the latest reading remains deeply in negative territory and did not show broad-based improvement across sectors, reflecting tough trading conditions for firms in an economy battling to grow.  

This is according to the latest RMB/BER Business Confidence Index (BCI) for the fourth quarter, released on Wednesday.

The index rose from the third quarter’s record low of 21 index points, to reach 26 in quarter four.

The BCI surveys 1,800 respondents across five sectors, namely manufacturers, building contractors, retailers, wholesalers and new vehicles dealers. It measures respondents’ views on prevailing business conditions as a proxy for business confidence.

The index’s neutral mark is 50, with a reading below that deemed to be negative.

At 26, the BCI remained “deep in net negative terrain, with a strong majority of respondents still expressing a sense of pessimism”, RMB said in a statement.

“At current levels, business confidence remains consistent with an economy bumbling along in near recession-like conditions,” it said.

Improvements in confidence came from three of the five sectors – the building, manufacturing and retail trade. But levels of confidence declined in new motor trade, while staying unchanged in the wholesale trade sector.

“For us to convincingly conclude that the long and persistent downturn in the RMB/BER BCI has bottomed out will take not one, but several, quarters of improvement in sentiment driven by a consistent recovery in underlying activity,” RMB chief economist Ettienne Le Roux said.

A “confidence-inspiring” budget in February, and the successful implementation of the economic strategy paper, put forward by finance minister Tito Mboweni – coupled with signs that the worst of the global trade slowdown is over – would “go  a long way to help make this happen”, he noted. -Businesslive