South African business confidence slumped as strikes in the mining industry curbed output in Africa’s biggest economy, two separate reports show.
The South African Chamber of Commerce and Industry’s business confidence index fell to 90.4 last month from 92.4 in the previous month, matching the lowest level in almost 10 years reached in March. The RMB/BER index, which the Bureau for Economic Research compiles on behalf of Rand Merchant Bank from surveys of businesses, slumped four points to 48 in the second quarter, RMB said in an e-mailed statement today.
Mining strikes last year caused almost 15 billion rand ($1.5 billion) in lost output and shaved about 0.5 percentage point off gross domestic product, according to the National Treasury. Unrest has continued this year and may intensify as unions seek to pressure companies into agreeing to wage increases above the 5.9 percent inflation rate.
“In the context of continued labor unrest, warnings of power outages and the sharp fall in the value of the rand, one could easily have expected a decline bigger than the actual four index points,” RMB, a unit of Johannesburg-based FirstRand Ltd., said in the statement.
A reading below 50 indicates more companies are pessimistic about prevailing business conditions.
The rand has fallen 13 percent against the dollar this year, making it the worst performer among 16 major currencies tracked by Bloomberg after the Japanese yen.
“Socio-political events, including on-going militant labor action, are having a harmful impact on the business mood and commercial and industrial activity levels,” the Johannesburg-based chamber said in an e-mailed statement. “Ill-disciplined and lawless conduct by economic role players leads to undesirable effects on growth, the rand and unemployment, which could have been avoided.”
The chamber’s index is compiled from 13 economic indicators, including retail sales, inflation and financial gauges, such as a stock-market index and the currency.