South Africa’s business confidence fell for a fifth month in a row in June, with activity mainly hit by a sharp decline in the currency as well as slower retail sales.
The South African Chamber of Commerce and Industry’s (SACCI) monthly business confidence index (BCI) fell to 93.7 in June from 94.0 in May, the business body said in a statement.
It was the lowest reading since September 2017, and short of last year’s average of 94.4.
Business confidence raced to a 2.5 year high in January after Cyril Ramaphosa’s election as leader of the ruling African National Congress in December, with the private sector anticipating business-friendly policy changes following years of uncertainty under former president Jacob Zuma.
The enthusiasm has since stalled following a raft of lukewarm economic data figures, most notably a wider-than-expected contraction in gross domestic product in the first quarter.
“Uncertainties surrounding economic policy direction and position should be clarified so that investor and business confidence can reaffirm itself,” SACCI said in a statement.
A sharp slide in the rand, triggered by rising lending rates in the United States and fears that a trade war between China and the United States would slow global growth, has also dented confidence.
The rand has fallen about 15% against the dollar since the beginning of April.
SACCI said seven of the thirteen sub-indices reflected negativity in the business environment, with the trade-weighted exchange rate recording the most notable decline.
“The risk of a global trade war has alerted certain industries in South Africa, and they have already indicated it would affect industries and employment negatively, while knock-on effects have been cited by complementary industries and their export performances,” SACCI said.