South African business confidence rose from a nine-year low in June as manufacturing output and exports increased while inflation slowed, the Chamber of Commerce and Industry said.
The business confidence index gained for the first time in four months to 94.9 from 92.8 in May, the Johannesburg-based chamber said in an e-mailed statement today. The index is compiled from 13 economic indicators, eight of which improved in June from the previous month.
The debt crisis in Europe has curbed export demand from a region that buys about a third of South Africa’s manufactured goods, undermining business sentiment. Growth in Africa’s biggest economy eased to an annualized 2.7 percent in the first quarter from 3.2 percent in the previous three months as mining output slumped and retail sales growth slowed.
The recovery in confidence “may still be tested given the uncertain global economic situation as well as socio-political and economic circumstances in South Africa,” the chamber said.
Inflation slowed to 5.7 percent in May from 6.1 percent a month earlier, giving the central bank room to cut borrowing costs as economic growth slows. The bank aims to keep inflation within a range of 3 percent to 6 percent.
Manufacturing, which makes up 15 percent of the economy, rose 1.2 percent in April from a year earlier, rebounding from a contraction of 2.9 percent in March, the statistics office said on June 7.
“The need for market-driven private sector fixed investment from local as well as foreign investors remains vital,” the chamber said.