Wednesday, July 22, 2009

SA Business Optimism Grows

Good new for South African business owners and Business Investors is that the report in the Times this week that business confidence in South Africa is on the up. If you are anything like me you may also be growing tired of the constant press of down turns and slow economic sow downs, so this news comes as a welcome respite.

From my own conversations with small business investors and SA entrepreneurs, opinion has been divided on the effect of the slow down. Many small businesses are growing and feel little effect apart from that they have been reading about in the press. On the other side there are also a number of businesses who are very much aware that consumers are careful with their spending. I do still believe that many businesses have their future in their own hands and a forward looking innovative approach seems to still be baring fruit for numerous business owners and entrepreneurs. The article from the Times can be seen bellow.

SOUTH African businesses are optimistic about the country’s economic climate.

These were the findings of the June Business Confidence Index compiled by the South African Chamber of Commerce and Industry, and which measures confidence in the economic climate.

But the report cites the recent 31.3percent electricity tariff increase by Eskom as one of the most significant threats facing business.
It said that by May 2010 the price of electricity will have gone up by 62.5percent.

The index recorded a score of 83.1 that, while far below last year’s June level of 92.6, was the highest recorded for 2009.
In March, the index was at its lowest at 78.9 before making gradual improvements in April and May.

Out of the 13 indicators, six had a positive impact on the index. These were liquidation levels, exports, vehicle sales, construction projects, precious metals prices and the rand exchange rate.

The negative indicators for the month were in manufacturing, imports, retail sales, inflation, private sector borrowing and real finance costs. The impact of share prices remained unchanged.
Sacci economist Richard Downing said: “Domestic and foreign demand for South African goods and services is strained and this has negative consequences for the supply side factors of production, namely labour, capital and operating overheads.”
Economists said the index was tracking the state of the economy fairly accurately.

Tony Twine, Econometrix director, said: “It certainly confirms the general business activity during the second quarter of the year. Vehicle sales, which were atrocious in March, recovered in May and slightly more in June.”
Standard Bank economist Johan Botha said, though the climate was still depressed, the economy was beginning to turn around.

“The rand has strengthened well over the year, which might have a negative effect on imports, but it also indicates that we are approaching the bottom of the cycle,” he said.
More details on this from the Times News Paper here

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