South African business confidence improved last quarter as a weaker rand made exports cheaper, benefiting manufacturers on the continent’s largest economy.
The RMB/BER index gained 6 points to 52, Rand Merchant Bank, a unit of Johannesburg-based FirstRand Ltd., said in an e-mailed statement today. A reading above 50 indicates more companies are optimistic about prevailing business conditions.
“Supported by the weaker rand exchange rate, sales volumes improved all round,” RMB said. “More expensive imports helped to shift demand to locally-produced goods, while the competitiveness of domestic exporters also improved.”
The business confidence index, which is compiled by the Bureau for Economic Research on behalf of RMB, differs from the measure published by the South African Chamber of Commerce and Industry today. That index fell to 90.4 in March, the lowest level since at least 2003, the Johannesburg-based chamber said in a separate report. SACCI compiles the index from 13 economic indicators, including retail sales and manufacturing data, while the RMB measure is based on surveys of businesses.
The rand has fallen 8.4 percent against the dollar this year, making it the worst performer among 16 major currencies tracked by Bloomberg. Manufacturing output grew an annual 3.9 percent in January, the fastest pace since July, the statistics agency said on March 14.
Increasing electricity prices, new labor strikes and the threat of power failures make it “uncertain whether business confidence will sustain its upward trend,” RMB said.
Finance Minister Pravin Gordhan on Feb. 28 lowered his economic growth forecast for this year to 2.7 percent from 3 percent.