July 5 (Bloomberg) -- South African business confidence gained in June as increased consumer spending bolstered the recovery in Africa’s largest economy, the country’s Chamber of Commerce and Industry said.
The Business Confidence Index advanced to 86.8 from 85.8 in May, the Johannesburg-based chamber, known as SACCI, said today in an e-mailed statement. The index is compiled from 13 economic indicators, including retail sales, inflation and financial gauges, such as the stock index and the currency.
“The recovery in real household expenditure in durable goods, such as motor vehicles, was robust as lower interest rates were easing the burden of indebted consumers,” the chamber said. The central bank has kept its benchmark interest rate at a 30-year low of 5.5 percent this year.
South African consumer spending, which accounts for two- thirds of demand in the economy, rose in the first quarter as real disposable income grew, the Reserve Bank said on June 21. Retail sales rose as its fastest pace in almost four years in April, increasing 9.8 percent from a year earlier, Statistics South Africa said on June 15.
With mixed signs in the economy, current consumption patterns are “dubious and may contribute to a false sense of improved business confidence,” the chamber said. The driving force behind the current performance is fragile, it said.
--Editors: Gordon Bell, Nasreen Seria
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