Business confidence has increased in the first quarter of 2022, from an unchanged 43 points in the fourth quarter to 46, almost at the neutral 50 mark of the second half of last year. New vehicle dealers, wholesale and manufacturing all showed an improvement. According to the RMB/BER Business Confidence Index , the 46 points is encouraging as it equals the BCI’s long-term average. It is also different from the low of 5 recorded at the height of the Covid-19 pandemic in 2020.
New vehicle dealers registered the biggest increase after declining from 47 to 41 in the fourth quarter of 2021. Sentiment recovered to 54 in the first quarter. Improved supply helped to increase sales, but dealers said they could not satisfy demand completely because stocks remained below satisfactory levels.
On the downside, business confidence among retailers declined from 52 to 49, while confidence for building contractors decreased to 25. Retailers of non-durable goods lost the most confidence as sales decreased due to rising food price inflation. Sub-contractors, on the other hand, continued to benefit from factors such as refurbishing office buildings and/or converting them into multi-use precincts.Reasonable rebound
“However, the stagflationary shock brought about by Russia’s invasion of Ukraine has now triggered a significant degree of uncertainty and downside risks around global and by implication South Africa’s gross domestic product growth prospects. This is most unfortunate as it happens at a time when the economy seems to have been well on its way to a full recovery from the significant output losses incurred in 2020.