Factory recovery could boost confidence

The business confidence index produced by the Bureau for Economic Research each quarter is likely to have surged from its previous weak level of 28 in the fourth quarter of last year.

Deteriorating confidence in both manufacturing, SA's second-biggest sector, and construction kept the index from rising more strongly late last year. Now industry surveys show factory output rebounding more strongly than expected, while other sectors also gather momentum.

Citigroup economist Jean Francois Mercier sees the index climbing 14 points to 42 — still well below its long-term average of 56. Analysts blame pending electricity price hikes for restraining gains in confidence.

“We expect business confidence to have improved on the economic recovery, both locally and globally,” Investec economist Kgotso Radira said.

News that SA's economy grew 3.2% in the fourth quarter of last year — accelerating much more than expected from 0.9% in the third quarter — has supported local business sentiment.

Source: Business Day