BCI falls to 36 index points in Q2: RMB/BER (2)

    Johannesburg, June 8 (I-Net Bridge) - The Rand Merchant Bank/Bureau for Economic Research (RMB/BER) Business Confidence Index (BCI) slowed in the second quarter of this year after surging by 20 index points over the courseof just two quarters.
    The index eased by seven points to a level of 36, far from the key 50index point level.
    Despite this, the RMB said there was no need to sound alarm bells.
    “It would be wrong to take the seven point decline in confidence as indicative of a prospective slump in real output,” said Rand Merchant Bank chief economist, Ettienne le Roux.
     Confidence in all five sectors which make up the RMB/BER BCI fell, withthe largest declines occurring in the retail and motor trade sectors.
    These two were the same sectors that saw confidence increasing the strongest in the recent quarters.
    A reading of zero indicates an extreme lack of confidence, 50 indicates neutrality while 100 represents extreme levels of confidence.
    The RMB said while the drop in confidence was disappointing, that it was  “not entirely unexpected” as it follows the largest improvement in sentiment between consecutive quarters in 15 years.     

 ”The second quarter decline can therefore be partly attributed to confidence merely returning to more realistic levels,” the bank said in a statement.
    The index showed that in the retail sector, nearly all of the 16-pointgain experienced since the third quarter of last year was lost, as confidence dropped by 13 index points to 38 during the second quarter of 2010.
    Declines were particularly notable in the case of durable andsemi-durable goods sectors while the confidence of dealers in non-durable goods eased to a lesser extent.
     Confidence in new vehicle trade tumbled from a high of 60 to a neutral level of 49 in the second quarter. Confidence fell because dealers are concerned about the sustainability of the current strong growth in sales.
    Confidence in the building sector fell from an already low 26 to 20index points while the mood in manufacturing largely remained unchanged at 27 index points.
   
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