Ricochet News

Eastern Cape business more positive than their provincial counterparts

DECEMBER 9, 2015
Eastern Cape business more positive than their provincial counterparts

The Eastern Cape is still bucking national trends of business confidence by staying in positive territory while confidence levels in the country generally slump to their lowest levels since the global economic meltdown in 2010.

The confidence level in the province is 53 index points out of a possible 100, compared with the national level of only 38 points.

Eastern Cape’s average was boosted by high levels of confidence among businesses in the wholesale, retail and construction sectors, but dragged down by very low confidence levels among manufacturers.

The figures are contained in the third quarter report for 2015 of the Real Investment Monitor published by the Eastern Cape Department of Economic Development, Environmental Affairs and Tourism.

The statistics, extracted from surveys conducted by the Bureau of Economic Research, show that South Africa’s business confidence slumped to a five-year low in the quarter, to a level not seen since 2010.

While the average business confidence in South Africa has only broken through the 50-point “neutral” mark three times since 2010, the Eastern Cape performed relatively better in the third quarter with its slightly positive average.

The highest levels of business confidence in the third quarter in the province were shown by wholesalers, who on average rated their confidence at a strong level of 93 points, with retail businesses close behind on 84 points. Construction businesses surveyed were also confident, with 61 points.

But the overall average was brought down by a very poor level of confidence surveyed among manufacturers of only four index points, while vehicle sale businesses also rated their confidence level at a low 25 points.

The low levels of business confidence have been tracking the decline in South Africa’s Gross Domestic Product (GDP), which the Real Investment Monitor shows moved down into negative territory at -1.27% growth in the second quarter of 2015.

GDP is continuing its downward trend from a temporary high in Q4 2014, and investment levels similarly fell along with GDP.

However investment levels avoided going into the red by achieving a growth rate of 0.96% in the second quarter of 2015.

The Real Investment Monitor predicts a short-term outlook of very volatile movements in growth and investment.