ECONOMY
Business confidence remains strong
Posted Tue, 29 Nov 2005
Business confidence remained strong and business activity lively in the fourth quarter, a business confidence index by Rand Merchant Bank and the University of Stellenbosch's Bureau for Economic Research has found.
The index declined by an insignificant one index point to 86, from 85 in the previous quarter, Rand Merchant Bank said on Monday.
"This decline is so small that for all purposes business confidence remained unchanged at an extraordinarily high level," it said.
The experience of the five business sectors surveyed differed somewhat, but all remained in strongly positive territory.
New vehicle dealers' confidence declined by seven index points (from 99 to 92), moving from a situation where all dealers were satisfied with prevailing business conditions to one where a still overwhelming nine out of ten were satisfied.
The fourth quarter decline could partly be attributed to a correction from an abnormally high level, but also to the
perception that the decline in interest rates, which had buoyed vehicle sales to record levels over the past three years, might have come to an end.
Wholesalers' confidence increased by six index points (from 84 to 90).
Building contractors' confidence remained extraordinarily strong. It declined by two percentage points (from 94 to 92) and reflected the ongoing strength of the residential and non-residential property markets.
Retailers' confidence weakened by three points (from 85 to 82). The small decline was in line with the slightly slower growth in retail sales volumes since mid-year, Rand Merchant Bank said.
Manufacturers' confidence remained unchanged at 68 in the fourth quarter — still up from net negative terrain (below 50) as recently as the end of 2003.
Sustained high business confidence levels boded well for economic growth in the new year, the bank said.
Confidence over the past year might also indicate that the
buoyancy of the South African economy had not been fully captured by official gross domestic product statistics.
It could be that Statistics South Africa's annual revision of historical GDP data (to be published on November 29) would show a much improved picture, the bank added.
Sapa
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