In its slowest start to the year since 1997, the South African Chamber of Commerce and Industry’s (Sacci’s) Business Confidence Index (BCI) rose by one index point to 89.3 in January, reflecting a still-subdued business mood.    

Describing business confidence as “muddling on”, Sacci economic consultant Richard Downing said on Thursday that, as suggested by the return to below-90 levels in December and January, the improvement in November’s BCI of 90.8 appeared to have been a random increase.

“The potential for serious disruptions of the economy and business are already present and will not only restrain economic activity, but may set the economy on an indifferent course in 2015,” he told a media briefing in Rosebank.

Downing added that no clear short-term trend from the BCI’s individual subindices could be established on a month-on-month basis. 

Only two financial subindices  – rand exchange rate and precious metals prices – and three real activity subindices – retail sales, imports and exports – were positive month-on-month – similar to that of December.

The below-par business sentiment was spread across activities, Downing found, with seven of the thirteen subindices negative year-on-year. 

Manufacturing, imports, vehicle sales, building construction, and real private-sector borrowing were the only subindices to improve year-on-year.

“[Optimistically], the overall financial climate is slightly better compared with the year-on-year changes in December, with the weighted rand exchange rate improving and more credit being made available in January  than a year ago,” he asserted.

The economist outlined further that a number of major developments could be crucial to the economic and business climate this year, while, domestically, there were continuing high-risk disruptions to the economy and businesses.

These included electricity shortages, business lootings, high-profile business crimes and robberies, political and social intolerance and public sector inefficiencies.

This was somwehat offset by possible supportive developments, such as the lower fuel price and a higher discretionary disposable income of households owing to price changes.

“The net impact of these developments is feeding negative economic and business attitudes. The uncertain environment will contribute to a further decline in business and investor confidence. 

“It is, therefore, of the utmost importance that the upcoming budget give a reassurance of a consistent and business enhancing policy framework,” he commented.