Business confidence edges higher

South African business confidence ticked higher in June, but remains below levels from a year ago after weak economic data and power blackouts in the first half of 2019.

An index measuring sentiment rose to 93.3 in June from 93 in May, the South African Chamber of Commerce and Industry said Wednesday.

Key insights

  • Stubbornly low South African business confidence adds to the risk that the economy may fall into its second recession in as many years. The gauge has been below 95 for the past five months, close to the three-decade low 89.6 of August 2017.
  • Africa’s most-industrialised economy is stuck in its longest downward cycle since 1945, remaining weak for the 67th consecutive month in June, according to data from the Reserve Bank.
  • While mining and manufacturing output show signs of revival after a series of rolling blackouts hamstrung production and led to a 3.2% annualised decline in gross domestic product in the first quarter, weak sentiment threatens to derail a sustainable recovery in the two sectors that account for 23% of GDP.
  • Business sentiment jumped to a two-year high in early 2018 after Cyril Ramaphosa won the leadership of the ruling African National Congress and the country but slumped as reforms were stalled.

© 2019 Bloomberg L.P.

Source: moneyweb.co.za