Business confidence has hit a 15-year low, according to the SA Chamber of Commerce and Industry’s (Sacci) business confidence index (BCI) for July.<\/p>\n
The index declined from 89.7 in June to 87.9 in July.<\/p>\n
This is the lowest level since the index stood at 86.9 in September 1999.<\/p>\n
Sacci stated that persistent labour unrest last month remained a challenge for businesses and that the index drop was disappointing.<\/p>\n
“Inflationary pressures and the increase in the repo rate in July 2014 contributed to an already repressed business mood.”<\/p>\n
Five of the 13 sub-indices were negative in July, compared to eight negative sub-indices in June.<\/p>\n
“Important sub-indices like manufacturing output, import volumes and building activity made negative month-on-month contributions to the BCI in July 2014.”<\/p>\n
International developments were responsible for the positive contributions of share and precious metal prices.<\/p>\n
According to Sacci, the impact of the steel and related industries strikes in July was broader on the economy despite having a shorter duration than in the platinum metal sector.<\/p>\n
“It is expected that large-scale rationalisation will have to take place to remain internationally competitive,” it stated.<\/p>\n
“Employment will decline thus feeding the unemployment numbers and leading to greater inequality and an increase in the Gini coefficient.”<\/p>\n
The latest wage demands were more than triple the inflation rate in some cases.<\/p>\n
Sacci said this was unaffordable to businesses.<\/p>\n
“With the consumer playing a diminishing role in the domestic economy, related measures of business confidence will likely be lower.”<\/p>\n
The Gini coefficient measures inequality in the population.<\/p>\n
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