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S. African business confidence suffers setback

Xinhua, September 3, 2015 Adjust font size:

South Africa's business confidence suffered a setback in August due to domestic and international factors, a business chamber said on Thursday.

These factors included subdued domestic economic performance and financial market nervousness as well as global financial market turmoil and economic uncertainty, the South African Chamber of Commerce and Industry (SACCI) said.

These circumstances caused the SACCI Business Confidence Index (BCI) to retract to an even lower level than in June 2015, the chamber said in a report released in Johannesburg.

After increasing to 87.9 in July 2015 from 84.6 in June 2015, the SACCI BCI registered 84.3 in August 2015.

The SACCI BCI has declined by 8.5 points since February 2015 (thus far the peak in 2015), while the BCI declined by only four index points from the highest to the lowest level in 2014.

The intensity and pace of the deterioration in business confidence in 2015 is much faster than in 2014. Notwithstanding the BCI bouncing back in July 2015, it appears that business confidence in August confirms the declining trend for at least the short-term, the chamber said.

Although physical business activities were slightly better in August than in July, the financial situation remained negative to uncertain compared to July 2015, said the chamber.

The uninspiring comparative year-on-year business mood in July 2015 worsened in August 2015 and the BCI dipped well below the BCI for August 2014.

The present slow growth of 1.2 percent year-on-year in South Africa for the second quarter of 2015 concerns SACCI, the chamber said.

Although the rand prices of commodities are holding up due to the weaker rand, the earnings of foreign exchange from this source due to price and volumes are putting the economy and commodity based businesses under severe pressure in South Africa, said the chamber.

The rand has been suffocating on the currency markets due to local uncertainty about the economy, the current account deficit and capital outflows and volatility.

Apart from the exchange rate, inflation comes under pressure from inefficiencies in the provision of utility services as well as wage claims well in excess of inflation.

The public sector finds it difficult on a broad front with tax income and revenue below expectations.

"SACCI is worried that these circumstances suggest that the South African economy is heading for even more difficulties over the short to medium-term," the chamber said. Enditem