Business confidence in eThekwini Municipality soars to record highs in third quarter of 2024

The eThekwini Municipality has seen a remarkable rise in business confidence as economic indicators indicate a positive turnaround. Picture: Doctor Ngcobo/African News Agency(ANA)

The eThekwini Municipality has seen a remarkable rise in business confidence as economic indicators indicate a positive turnaround. Picture: Doctor Ngcobo/African News Agency(ANA)

Published Oct 15, 2024

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Business confidence in eThekwini Municipality surged to 63.01 in 2024 Q3 from 55.49 in the previous quarter 2024 Q2, as the municipality enjoyed uninterrupted electricity supply like the rest of the country.

This is according to the Durban Business Confidence Index (BCI) which presents the mood or sentiment of business people that conducting their day-to-day business in the eThekwini Municipality area.

A BCI that is greater than 50 shows confidence in the economy.

The Macroeconomics Research Unit (MRU) at the University of KwaZulu-Natal computes the index once every quarter using survey data on business conditions and business expectations.

The Durban BCI

Confidence in Durban’s business environment continued on a positive trajectory in 2024 Q3 following 55.49 BCI for 2024 Q2 which was the first time that the index showed business confidence in Durban, since its inception in 2022.

Business Confidence Index grew by 7.52 index points from 2024 Q2 to 2024 Q3. Year-on-year there was an improvement of 41.02%.

Although the Durban BCI generally moves in the same direction as the national BCI, it remains significantly higher than the national index by the Bureau of Economic Research (BER).

The national BCI improved by 3 index points from 35 in Q2 to 38 in 2024 Q3.

Overall, all sectors registered improvements in business confidence, resulting in a noteworthy increase in the overall BCI. These improvements can be attributed to the various factors including:

– easing macroeconomic conditions

– the performance of the rand has greatly improved, resulting in a decline in petrol and diesel prices.

– decrease in inflation and expectations thereof has resulted in interest rate cuts

– political stability due to establishment of the Government of National Unity (GNU) and the Government of Provincial Unity (GPU) In KwaZulu-Natal (KZN)

Business confidence in the agriculture, hunting, forestry and fishing sectors increased from 40.12 in 2024 Q2 to 70.3 in 2024 Q3.

This represents change of 75% from 2024 Q2 to 2024 Q3 which indicates a strong rebound of business confidence in the sector.

Year-on-year, business confidence rose by 45% in 2024 Q3.

For the manufacturing sector, business confidence continued to rise in 2024Q3, rising from 50.8 in 2024 Q2 to 62.94 in 2024 Q3, representing a 23.89% increase in business confidence.

This rise in confidence can attributed to factors, such as the decline in fuel prices, a stable electricity supply, and stable macroeconomic conditions.

For the 2024 Q3, only 8.2% of the participants raised concerns about electricity-related services in the eThekwini Municipality, therefore business confidence in electricity, gas and water supply sector improved.

Business confidence in the electricity, gas and water supply sector rose from 73.81 in 2024 Q2 to 75.24 in 2024 Q3, a 1.94% increase.

According to the index, developments in the electricity sector will typically spill over to other industries therefore improvements in this sector will likely boost business confidence in other sectors.

The construction sector also experienced an increase in business confidence increasing from 61.59 in 2024 Q2 to 68.91 in 2024 Q3, a 11.88% increase and 359.4% increase year-on-year.

This reflects the efforts by law enforcement agencies, together with relevant government stakeholders, to fight the so-called ‘construction mafias,’ which has damaged business confidence in this sector.

The transport, storage, and communication industry recorded an improvement in business confidence in 2024 Q3.

The industry experienced 12.61% increase from 68.29 points in 2024 Q2 to 76.90 in 2024 Q3 while the community and social services industry had a 10.67% decline in business confidence.

The community and social services industry only sector to experience a drop in business confidence.

For the financial intermediation, insurance, real estate, and business services sector there was 6.62% increase in business confidence.

This means that business confidence grew from 54.04 in the 2024 Q2 to 57.62 2024 Q3 while year-on-year there was 60.31% increase in business confidence.

These improvements largely reflect the easing of financial market conditions after the South African Reserve Bank (Sarb) recently cut the repo rate from 8.25% to 8% in September 2024.

The report said that the slashing of the interest rate implies a cheaper cost of credit and improved economic conditions.

The wholesale and retail trade sector which includes the repair of motor vehicles, motorcycles, personal and household goods, catering, and accommodation, showed significant improvement from 2024 Q2 to 2024 Q3.

According to the report, this increase in business confidence in this sector is due to better economic conditions, which implies higher expected aggregate demand.

The decline in prices, implies a higher demand of goods and services in the sector and the strong rebound in business confidence.

Overall, all sectors, except for the community, social, and personal services sector, experienced improvements in 2024 Q3.

The construction and manufacturing sectors are the biggest gainers or contributors to the improved overall business confidence.

IOL Business