Business confidence recovered partially in the third quarter, but sentiment showed little improvement, with most of the respondents still downbeat about prevailing business conditions.
The Rand Merchant Bank (RMB) and Bureau for Economic Research (BER) Business Confidence Index (BCI) revealed that confidence among senior executives in the building, manufacturing, retail, wholesale and motor trade sectors, increased by six points to 47 in the third quarter, from 41 in the second quarter.
RMB noted that the slight improvement in the third quarter only partially neutralised the significant fall in the second quarter when confidence dropped by 11 points, from 52 in the first quarter.
Although business confidence increased in all the five sectors, wholesale was the only sector where sentiment continued improving in the third quarter.
After edging up by two points to 50 in the second quarter, wholesale confidence increased by a further three points to 53 in the third.
Sales volumes of nonconsumer goods, including machinery, equipment, building material, chemicals and metals, as well as consumer goods, such as agricultural products, food and clothing, continued to fare well.
New vehicle dealers registered the biggest improvement in sentiment and it was the only sector in which confidence grew by more in the third quarter than it had declined in the second. The index jumped by 14 points from 65 in the second quarter to an 18-month high of 79.
Improved sales in the third quarter buoyed motor dealers.
NOT MAKING UP LOST GROUND
However, the survey found that the third-quarter recovery in confidence in the remaining three sectors was insufficient to compensate for the big fall in the second quarter.
Building confidence increased by two points in the third quarter after falling by seven index points to 24 in the second quarter. This was owing to building activity improving from the second quarter and the rate of contraction being lower, compared with the previous corresponding period.
Although at an index level of 26, the mood among building contractors remained low relative to the other sectors.
Meanwhile, retail confidence recovered by four index points to 43, after falling by 22 index points to 39 in the second quarter.
However, while retail sales volumes improved in the third quarter, the growth was less robust compared with the second half of last year. Sales of nondurable goods such as food, beverages and pharmaceuticals, were slow, while sales of semidurable, and, to a lesser extent, durable goods, continued to do well.
Similar to the building and retail sectors, the four index point improvement in manufacturing confidence to a level of 33, only partially compensated for the 18-point decline in the second quarter.
The growth in manufacturing production slowed in the third quarter relative to the second, but remained positive. Weaker domestic sales and a drawdown of inventories trimmed the growth in production.
RMB pointed out that if the sharp, but temporary, rebound in mining output was excluded from the second-quarter gross domestic product number released last month, growth moderated to a yearly rate of 1.9%.
The diversified financial services provider stated that the latest RMB/BER BCI pointed to the economy, excluding mining, in all likelihood not having fared much better, if at all, during the third quarter.