Business confidence suffered a setback in May, falling to 90.4, which is 1.9 index points lower than in April, the South African Chamber of Commerce and Industry (Sacci) said on Tuesday.
Sacci’s monthly Business Confidence Index (BCI), which is market influenced and accounts for economic and other developments that have a bearing on the business mood in the country, was influenced both positively and negatively by various developments in May.
“Although the BCI recovered by 1.9 index points in April 2013, there have since been developments in the domestic economy that have adversely impacted some important BCI sub-indices,” said the chamber.
“The negative impact on the business climate came mainly from causes exogenous to private business activity but which play a cardinal role in affecting business confidence, economic performance and financial markets.
“Socio-political events, including on-going militant labour action, are having a harmful impact on the business mood and commercial and industrial activity levels, while also distorting financial market performance.”
In May, the annual change in the BCI sub-indices were slightly more encouraging than in April, as seven of the 13 sub-indices improved year-on-year, In April 2013, only three sub-indices were positive and one was neutral.
“For Sacci, it is disconcerting that major economic sectors that have the ability to create employment growth are contracting, while others are experiencing exceptional cost pressures resulting from rising labour costs and intermediary inputs like fuel, electricity and water prices that are increasing faster than the general price level as measured by the CPI (5.9%) and the PPI (5.4%).
“The decline in the Sacci BCI in May 2013 shows that non-economic factors can have a damaging impact on the economy and on the business climate. Ill-disciplined and lawlessness conducted by economic role players leads to undesirable effects on growth, the rand and unemployment, which could have been avoided,” Sacci said.
Sacci further added that if business confidence was to rise above its current levels of vulnerability, it was essential that economic role players urgently rally around a common vision of sound business values and economic progress.
At a special media briefing last week, focusing on the economy and mining, President Jacob Zuma called for a stable and growing mining sector.
The industry has experienced several challenges recently, including labour unrest.
“It remains the cornerstone of our economy,” Zuma said of the industry that accounts for 6% of the country’s GDP and generates 60% of SA’s export revenues. It also provides jobs to over a million people.
“When our mining sector is in difficulty, this affects the wider economy, leading to industrial slowdown. In addition, 2012 was a difficult year for the mining sector,” he said.
Zuma has asked Deputy President Kgalema Motlanthe to lead interactions with labour and mining companies. – SAnews.gov.za