Johannesburg, Jun 8 (I-Net Bridge) - The second quarter Rand Merchant Bank/Bureau for Economic Research (RBM/BER) Business Confidence Index (BCI) could be evidence that economic growth in the second quarter of this year was weaker than that seen in the first three months of 2010.
    The BCI fell seven points to a level of 36 in the second quarter of this year compared to 43 index points in the first quarter.
    “In retrospect, the latest survey results would seem to indicate that initial expectations of a further sharp acceleration in real economic activity were misplaced with confidence now merely having returned to levels which better reflect actual underlying growth trends,” said Rand Merchant Bank in a statement.
    “In many sectors, growth in real activity indicators (sales volumes, order volumes received etc) remained virtually unchanged relative to the first quarter levels, pointing to another decent, albeit somewhat weaker GDP growth performance in the second quarter of 2010,” commented Rand Merchant Bank chief economist Ettienne le Roux.
    Economic growth accelerated by a strong 4.6% during the first quarter. Le Roux said this rate is unlikely to have “been sustained.”
        Confidence in all five sectors that make up the RMB/BER BCI fell, with the largest declines occurring in the retail and motor trade sectors.
    These two were the same sectors that saw confidence increasing the strongest in 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 index showed that in the retail sector, nearly all of the 16-point gain 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 and semi-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 20 index points while the mood in manufacturing largely remained unchanged at 27 index points.
    Wholesaler confidence declined by 3 index points to 47.
    Le Roux reiterated that there was no need to panic, as the decline was to be partly attributed to confidence merely returning to “more realistic levels”.
   
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