Enterprise iLembe in partnership with the iLembe Chamber of Commerce, Industry and Tourism collaborate to produce the iLembe Business Confidence Index (iBCI) aimed at providing a biannual picture of business confidence in the iLembe District, as well as an overall business outlook.

Highlights and key findings

• Business confidence in the iLembe District could not reverse the negative sentiment recorded in the previous period, nor escape the negativity of the national business climate indicators, with the combined hybrid iBCI (survey and activity indices) for the 2nd half of 2016 down a further 0.9 index points compared to the first half of 2016.
• The iBCI 2016 Year-End was recorded at 45.5 index points, the lowest level of business confidence recorded since the commencement of the iBCI.
• The survey component of the iBCI, which was conducted between the mid and end of January 2017, and which records subjective business sentiment, was recorded at the all-time low of 43.7 index points, one index point down from the 2016 Mid-Year level.
• The most confident economic sector in iLembe remained tourism, catering and accommodation, with businesses in this sector reflecting positive business confidence at 50.2 index points; however, 14.5 index points down from the level measured mid-year 2016.
• With the rainfall levels edging back to normal levels, the agriculture, forestry and hunting sector (49.3 >8.6) showed a significant rise in positive sentiment.
• Other economic sectors remain entrenched in the negative with the gloomiest sentiments expressed by the wholesale, retail and vehicle trade (31.3), transport, warehousing and storage (32) and manufacturing and assembly (39).
• Business confidence expressed by businesses in the Mandeni Local Municipality, home to the Isithebe Industrial Estate, deteriorated from the previous period and was recorded at 34.3 index points (<6.5).
• The iBCI activity index measured 47.2 in the 2nd half of 2016. In comparing the 2nd half of 2016 with the 2nd half of 2015 (y/y), the US$ sugar price (-16%) and inflation (-3%) showed the largest negative impacts. Tourism numbers (+19%) and real value of building plans passed (+5%) reflect increases that positively added to the business climate.
• The iBCI survey also reflects on business expectations over the next six months. The business outlook for the 6-month period January to July 2017 fell to 45.9 index points, a disappointing move of 5.4 index points into negative territory. The 6-month outlook around on-time supply, late delivery of orders, and inventory levels contributed to the movement, with sales volumes, order book, sales prices and input prices all being viewed positive by business owners.

South African Chamber of Commerce & Industry Business Confidence Index (SACCI BCI)

The SACCI Business Confidence Index (BCI) averaged 93.3 (2015=100) in the 2nd half of 2016, a decrease by 4.0 index points on the 2nd half of 2015. The 2nd half of 2016 average of the BCI declined by 0.3 index points on the 1st half of 2016.

The main year-on-year contributions to the deterioration of the SACCI BCI came from less new vehicles sold, followed by a decline of merchandise export volumes and lower all-share prices on the JSE. Higher inflation, less real retail sales, less credit extended, and higher cost of energy and lower manufacturing output contributed to lesser degree to disappointing business confidence.

In summary

The risk of the credit rating downgrade which was averted towards the end of 2016, an underperforming national economy, concerns about public finances and increasing levels of unemployment is reflected in the most negative iBCI recorded thus far.

The private sector and all levels of government within the iLembe District are committed to partnering on specific initiatives that will aid the viability and growth of small and medium enterprises and secure investment in key economic sectors and geographies in our district.

Enquires

Cheryl Peters, Acting CEO, Enterprise iLembe, cheryl@enterpriseilembe.co.za
Cobus Oelofse, CEO, iLembe Chamber of Commerce, ceo@ilembechamber.co.za
Richard Downing, Economist, Econdow, econdow@axxess.co.za

The full report is available visit www.ilembechamber.co.za