{"id":698097,"date":"2023-06-22T11:56:54","date_gmt":"2023-06-22T09:56:54","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=698097"},"modified":"2023-06-22T12:49:54","modified_gmt":"2023-06-22T10:49:54","slug":"confidence-collapses-in-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/698097\/confidence-collapses-in-south-africa\/","title":{"rendered":"Confidence collapses in South Africa"},"content":{"rendered":"\n

Business confidence across several sectors in South Africa has declined to extreme lows, with the latest ‘other services’ survey from the Bureau of Economic Research (BER) further highlighting the glum outlook.<\/p>\n\n\n\n

According to the Q2 2023 Other Services survey, business confidence dropped by a further two points from Q1 2023’s 45 points to 43 points – following a record 23-point drop in that quarter. <\/p>\n\n\n\n

The BER’s confidence index ranges between zero and 100, with zero representing no confidence at all and 100 representing extreme confidence, where all participants are completely satisfied with current business conditions. <\/p>\n\n\n\n

Currently, only four out of 10 business executives in the other services sector are satisfied with their prevailing business conditions. <\/p>\n\n\n\n

“The decline in confidence was supported by a further downtick in activity. However, despite the decline, the current level of activity is normally associated with a somewhat higher level of confidence,” the BER said. <\/p>\n\n\n\n

“Based on comments by some of the respondents, a challenging business environment amid intense load-shedding during the survey period, as well as high borrowing costs while inflation remained elevated<\/strong>, contributed to the negative sentiment.” <\/p>\n\n\n\n

\"\"<\/a><\/figure>\n\n\n\n

Excluding the confidence level of 1 achieved in Q1 2020, business confidence in the transport sector reached a record low of 11, corresponding to underlying degeneration in business conditions and business volumes. <\/p>\n\n\n\n

Business confidence amongst the realtor subsegment saw its fifth consecutive quarter drop to 34, despite a smaller net majority reporting a decline in business volumes compared to Q1 2023. Ultimately, a decline in profitability hurt sentiment. <\/p>\n\n\n\n

Following a two-point increase to 75 points in Q1 2023, business confidence in the hospitality subsector nosedived by 23 points to 52 in Q2 2023. Profitability turned negative for the sector for the first time since mid-2021. <\/p>\n\n\n\n

However, business confidence in the business services grew from 47 in Q1 2023 to 59 in Q2 2023, with a net 21% reporting an increase in volumes of sales relative to Q2 2022 – it was the only subsector to see any growth. <\/p>\n\n\n\n

“Overall business volumes declined further in the second quarter, but remain better than the
long-term average. This suggests that the sector may continue to provide some support to the economy while the more energy-intensive industrial sectors are straining,” the BER said. <\/p>\n\n\n\n

“However, with the exception of foreign tourism, many of the services captured in this survey are linked to the general strength of the local economy. Therefore, the relative outperformance will be difficult to maintain going forward without a more broad-based economic recovery.” <\/p>\n\n\n\n

Bleak environment <\/strong><\/p>\n\n\n\n

The BER has released several business confidence surveys over the last few weeks, with sentiment remaining downcast across all sectors. <\/p>\n\n\n\n

Overall, load shedding, soaring interest rates, high inflation levels and a weak rand have hurt business confidence in South Africa, with less than half of respondents in all of the BER’s surveys expressing satisfaction with prevailing market conditions. <\/p>\n\n\n\n

The latest RMB\/BER<\/a> Business Confidence Index (BCI) recorded a decline from 36 in Q1 2023 to 27 in Q2 2023. <\/p>\n\n\n\n

\u201cComments by respondents through the different sectors flagged load-shedding as a continued drag on sentiment as it hurts production capacity, increases costs, and negatively affects profitability,\u201d said the BER. <\/p>\n\n\n\n

\u201cAs such, respondents highlight that any available capital is going towards load-shedding mitigation measures \u2013 such as the installation of solar power \u2013 rather than an investment to build additional capacity.” <\/p>\n\n\n\n

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South Africa’s load shedding pain is far from over<\/a><\/blockquote>