BUSINESS confidence ticked up last month, close to the record high reached in December, as strong domestic demand and faster global growth stimulated business activity.
The latest business confidence index, compiled by the South African Chamber of Business (Sacob), increased slightly to 121,9 points last month from 120,8 in February. This was the fourth consecutive month that the index has been above the 120 mark, indicating that the business mood had adjusted to a "new set of circumstances", said Sacob.
The index is a composite of various economic and financial indicators, with a change in the index indicating an improvement or deterioration in the conditions in which business operates.
Boosting the Sacob index last month was an improvement in manufacturing, exports, vehicle sales, commodity prices and the exchange rate.
According to Sacob, the weighted exchange rate of the rand against the dollar, and the euro and sterling, was 10% higher in the first three months of the year compared with the same period last year.
With the strong rand making it difficult for exporters to stay profitable, Sacob said businesses would have to look at costs and new markets to boost earnings.
"The road to profitability for business will probably lie with volumes and new markets ," said Sacob. However, inflation is starting to weigh on business confidence, with last month's acceleration in prices and a pick-up in private sector credit increasing the chance of a rate hike later this year.
The Reserve Bank's targeted inflation measure, CPIX (consumer inflation less mortgages), which grew 4,8% year on year in February, is expected to creep closer towards the 6% upper limit and perhaps breach it by the end of the year, according to economists' forecasts.
While the rand's strength was likely to improve the inflation outlook, rapid growth in private-sector credit demand was a concern, said Sacob.
With private-sector credit demand rising 12,4% year on year in February, a tightening of monetary policy could be considered, but only by the end of the year, said Sacob.
The index also mirrors the buoyant sentiment recorded by the quarterly business confidence index from Rand Merchant Bank and the University of Stellenbosch's Bureau for Economic Research, which was at its highest level in 15 years for the first quarter.
I-Net Bridge 07 April 2004
Publisher: Business Day
Source: Inet Bridge
Local demand boosts confidence index
Posted On Wednesday, 07 April 2004 02:00 Published by eProperty News
BUSINESS confidence ticked up last month, close to the record high reached in December, as strong domestic demand and faster global growth stimulated business activity.
Latest from eProperty News
- Love and property: a homebuying guide for couples
- From Civic Landmark to Collaborative Hub: A New Era for Muizenberg’s Post Office
- Growthpoint breaks ground on Tecoma Park, Cornubia, advancing its local logistics strategy
- Rosebank Mall adds Livo to its lifestyle line-up
- 166 sectional title units in the iconic Parktonian Hotel, located in the heart of Braamfontein, Johannesburg
eProperty News is a leading online commercial property marketplace serving the Southern African Investment, Office, Retail and Industrial property and allied sectors.