The RMB/BER Business Confidence Index (BCI) fell from 18 to merely five points in the second quarter. This is the lowest level ever recorded since the BER first began conducting its business confidence survey in 1975. Strikingly, a reading of five indicates that just about every respondent in the second quarter was unsatisfied with prevailing business conditions.
The second quarter survey was conducted online between 13 May and 1 June. It covered about 1800 executives spread across building, manufacturing and the domestic trade sectors i.e. retail, wholesale and motor trade.
Over time, business confidence in these sectors has proved to be a reliable early indicator of GDP growth and private fixed investment, according to a statement just released. The fieldwork for the second quarter survey covered the period during risk level 4 and the announcement of the switch to the less restrictive level 3 on 1 June.
Until now, the lowest BCI on record was the 12 index points registered during the third quarter of 1985 and the fourth quarter of 1977. In both cases, confidence falling this low was the result of uniquely adverse political developments in South Africa.
A BCI plunge to five in the second quarter is consistent with a contraction in real GDP never seen before, according to the index originators.