The SACCI Business Confidence Index (BCI) declined by 0.9 index points to 92.2 in January 2020 and was 2.9 index points lower than in January 2019. The 93.1 of December 2019 was the highest BCI level since the 93.3 of June 2019 and the latest figures suggest that business confidence still finds it difficult to gain momentum.
SACCI says that intra-month changes in the business climate were notable in January 2020. The rand depreciated towards month-end, and share prices and commodity prices like that of crude oil and precious metals, changed considerably. Six of the thirteen sub-indices of the BCI improved on their previous month readings compared to four in December 2019, five were negative, and two remained unchanged.
Particular positive monthly impacts on the BCI came from real retail sales (Black Friday seasonal effect), merchandise import volumes, the US-dollar price of precious metals, and lower inflation. The most negative monthly impacts came from lower merchandise export volumes, less new vehicles sold, and lower real value of building plans passed.
The business climate also deteriorated between January 2019 and January 2020 as the BCI declined by 2.9 index points. The most notable negative annual impacts came from less merchandise export volumes, less real value of building plans passed, and deteriorating energy supply. Increased precious metal prices and lower inflation contributed positively to the business climate between January 2019 and January 2020.
A number of noticeable events and developments took place during January 2020 that not only had a bearing on the January 2020 business climate and the present economic milieu but may hold implications for medium to longer-term economic performance. Most of these more recent developments towards the end of January will have additional impacts and add to global risk and uncertainty over at least the medium term.
Developments during the latter part of January 2020 like the Corona Virus have again underlined the sensitivity and uncertainty that plagues the global and the domestic economy. Therefore February 2020 will be the month in which decisive developments may take place where the SONA and the Budget could determine the economic performance and the business climate for the longer term.