After registering a ten-year low in May, business confidence improved last month, but the South African Chamber of Commerce and Industry (Sacci), which compiles the business confidence index (BCI), said confidence might still be tested, given the uncertain global economic outlook and domestic sociopolitical and socioeconomic issues.

The BCI improved by 2.1 points from the ten-year low of 92.8 in May to 94.9 in June, but remained 7.5 points below the June 2011 level.

In the first half of 2011, the BCI averaged 102.6, although this average weakened to 98.3 in the second half of 2011 and to 95.7 in the first half of 2012.

“Although business confidence has strayed from its downward trend originating in March 2012, the promotion of a domestic environment that is nurturing to the supply side of the economy could provide a more lasting directional change in business confidence,” Sacci stated.

It said that market-driven private sector fixed investment from both local and foreign investors remained vital and that policy development should especially nuture foreign investors that had already ventured into the South African economy.

The BCI decline in May was followed by notable improvements in the subindices in June, Sacci stated. While only two of the thirteen subindices of the BCI were positive on a month-on-month basis in May, eight subindices turned positive with one remaining unchanged in June. The majority of the subindices in both the financial and real-economy divisions of the BCI were positive in June.

The year-on-year comparisons of the subindices was less convincing where five of the thirteen subindices improved in June 2012 and one remained unchanged. The financial environment was less supportive of a positive business mood than a year ago while there were signs that the real-economy environment might have consolidated.