Business confidence slips

Business confidence for May has slipped, the SA Chamber of Commerce and Industry (Sacci) says

Its Business Confidence Index (BCI) for May 2010 declined by 2.2 index points to 82, it said in a statement.

"The BCI increased steadily to 84.2 in April 2010 but, with the decline in May, the BCI is only 0.8 points higher than in January 2010.

"This neutralised the gains in business confidence in 2010," Sacci said.

In May 2010, only four BCI sub-indices were positive on a month-on-month basis compared to nine sub-indices that had a positive effect on the BCI in April 2010.

Nine sub-indices had either a negative or neutral effect in May 2010 compared to only four that had a negative impact on the BCI in April 2010.

"SACCI is concerned that under difficult economic circumstances South Africa is still dogged by debate on the economic model that is appropriate for the country and a spate of labour demands for wage rates well in excess of inflation.

"The latter developments will prolong the path to recovery and negatively impact growth and job creation prospects."

Last month Sacci said it was "deeply concerned" about the ongoing strike by the SA Transport and Allied Workers' Union and the United Transport and Allied Trade Union and the impact that the strike had had on the national logistics infrastructure.

Sacci was also currently a leading player in the process to mitigate a national strike relating to the electricity tariff increases by the three domestic labour federations.

"Despite the GDP [gross domestic product] figures for the first quarter 2010 indicating that economic growth has gathered further momentum, the current strike activity, the threats of future labour unrest and financial market developments on the back of global uncertainty may tarnish economic growth prospects later in 2010."

Sacci said while the positive sentiment and influx of visitors for the Fifa World Cup might yield positive economic outcomes, it was essential that all economic stakeholders realised the critical nature of positive contributions and responsible behaviour in the current fragile economic environment.