Business Confidence declined by six points to 39 in the second quarter of 2018 – after reaching 45 points in the first quarter of the year.
This is according to the latest Rand Merchant Bank (RMB) business confidence index compiled by the Bureau for Economic Research.
The BER takes the percentage of respondents that rates prevailing conditions as satisfactory as indicator or proxy of business confidence. The composite RMB/BER Business Confidence Index (BCI) is the unweighted mean of five sectoral indices, namely that of manufactures, building contractors, retailers, wholesalers and new vehicle dealers.
Business confidence can vary between 0 and 100, where 0 indicates an extreme lack of confidence, 50 neutrality and 100 extreme confidence.
“After surging from 34 to 45 in the first quarter, the RMB/BER Business Confidence Index (BCI) deteriorated to 39 in the second quarter of 2018,” RMB said.
“This means that close to three fifths of respondents now regard prevailing business conditions as unsatisfactory – a disappointing outcome, yet probably an accurate reflection of reality.”
However, RMB’s chief economist, Ettienne Le Roux, said that the trend in business confidence remains upwards, even if only tentatively so, despite the second-quarter decline, reports Reuters.
Le Roux added that it was important that the political and policy factors currently weighing down on confidence were resolved.
First-quarter business confidence jumped 11 points, mainly because of the change in the country’s political leadership in February, when Ramaphosa was elected.
But South Africa suffered its worst quarterly contraction in nine years in the first quarter. Gross domestic product shrank 2.2 percent, led by a slowdown in agriculture and mining, after expanding 3.1 percent in the final quarter of last year.