The South African Chamber of Commerce and Industry (Sacci) Business Confidence Index (BCI) improved by 2.3 index points to 97 in May, compared with 94.7 in April.

Sacci states that the month-on-month improvement in the BCI reflects the resilience of the business community.

The positive month-on-month contributions to the BCI in May were notably caused by the increase in merchandise export volumes and, to a lesser extent, by manufacturing output and consistent energy supply, it points out.

Sacci notes that the BCI for May was 26.9 points higher than the 70.1 points recorded in May 2020, when the country was still faced with a hard lockdown and related restrictions.

It notes that the substantial year-on-year improvement of 26.9 index points needs to be measured against the distortions caused by the Covid-19 lockdown. 

"The positive business climate was mainly fuelled by an export-led revival. The trade balance increased from a deficit of R4.4-billion in the first four months of 2020 to a substantial surplus of R147.8-billion for a similar period in 2021.

"The value of merchandise exports soared by not less than 51.6%, while the value of merchandise imports increased by a comparatively moderate 11%. This surplus recently was a main reason for rand strength and helped to dampen the effect of rising crude oil prices.

"South Africa’s export-led recovery should give room to address some of the structural deficiencies in the economy. The unemployment situation should be given the appropriate attention in the recovery action plans of government and business going forward," Sacci states.

It adds that the BCI for May points towards an improving business climate.

"This can however mainly be ascribed to an improved trade balance that positively affected the rand exchange rate which, in turn, took pressure off cost-push inflationary pressures.

"It remains important to continue to assure investors that South Africa remains an attractive investment destination. Unemployment, nevertheless, remains a major concern that can be offset by a sustainable growing economy," Sacci says.