The South African Chamber of Commerce and Industry (Sacci) Business Confidence Index (BCI) rose by 3.3 index points to 87.9 in July.

This followed a 2.3 index point drop in June and placed the BCI at a similar level to what it was in July 2014.

However, the BCI remained 34 index points below the high level of 121.9 recorded in December 2006 and about 12 points lower than the average of 100 for 2010 – the base year for the BCI.

“Although the BCI bounced up in July, it did not recover to above the medium-term downward trend of business confidence,” stated Sacci.

The chamber noted, however, that the month-on-month changes in the subindices of the BCI had been more positive in July than in June. 

In June, only one of the 13 subindices were positive month-on-month, with a further nine negative and three neutral.

“A notable positive month-on-month impact came from building plans passed in July, while export volumes improved well on the previous month. Retail sales volumes made a marginal positive month-on-month impact on the BCI in July,” said Sacci.

It added that the “uninspiring” comparative year-on-year business mood had, however, not changed for the better in July, with four of the six financial subindices negative, one neutral and one positive year-on-year in July.

“Lower inflation, excluding petrol, food and nonalcoholic beverages, had a positive impact on the BCI in July. Five of the real activity subindices were negative and two were positive,” noted Sacci.

The chamber was concerned that the present low domestic economic growth rate was not merely the consequence of cyclical or other short-term factors, but had deeper underlying problems. “There is an urgent need for persistent higher economic growth, without which South Africa’s economic problems cannot be alleviated.

“Present circumstances provide an opportunity to change direction towards a more normative acceptable policy approach serving longer-term economic growth imperatives. In noticing such change, business confidence could turn for the better,” it said.