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The
business confidence index rose to 38 points in the third quarter
from 35 points in the prior quarter, according to the survey by
the Rand Merchant Bank (RMB) and compiled by the Bureau for
Economic Research.
"Fortunately, the widely anticipated interest rate cut in South
Africa later this month, on the back of lower consumer inflation
and a boost from the introduction of the two-pot retirement
system should spur domestic demand through the remainder of the
year," Isaah Mhlanga, chief economist at RMB said in a
statement.
The South African Reserve Bank is expected to start cutting
interest rates from this month for the first time in four years.
The African National Congress lost its parliamentary majority
for the first time in 30 years in May, and later formed a broad
coalition with several parties including the market-friendly
Democratic Alliance.
Additionally, state-owned power utility Eskom managed to keep
the lights on for over five months without scheduled blackouts
in the country where power cuts have hampered economic growth
for over a decade.
However, businesses activity was still constrained especially
from weak demand, but the survey indicated conditions are
expected to improve in the next quarter.
Retail confidence improved to 45 points from 39 in the previous
quarter helped by improvement in durable and semi-durable
traders' sales volumes.
Manufacturing sector confidence remained stable 28 points as a
drop in production due to declining exports and domestic demand
was offset by optimism at new vehicle dealers surging to a
one-year high.
Wholesale trade was the most optimistic sector surveyed, with
over half of respondents satisfied with prevailing business
conditions.
(Reporting by Radhika Anilkumar in Bengaluru; Editing by Varun H
K)
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