Business confidence in South Africa reached a 23-year peak in the fourth quarter of 2004, rising 9 index points to 88 points, as measured by the RMB/BER business confidence index (BCI) released on Monday.

South Africa is expected to show its 24th consecutive quarter of GDP growth on Tuesday, which could enhance the likelihood of a favorable review of the country's economic outlook. GDP growth forthe third quarter may exceed 4 percent.

Commenting on the BCI findings, the Bureau for Economic Research (BER) at the University of Stellenbosch said that although another rise had been expected, the size of the increase had come as a surprise.

At 88 points, it is close to the peak of just below 91 index points reached in the third quarter of 1980, making it the highestreading in nearly a quarter of a century.

The results showed that during the fourth quarter, confidence rose further in all the sectors covered in the BER's business surveys, with confidence in all sectors, barring manufacturing, currently hovering around, or above, 90 index points.

This meant that nine out of every 10 respondents were satisfiedwith prevailing business conditions.

The biggest jump in confidence over the quarter occurred among building contractors, where the level now stands at 93, up from 79previously.

In the trading sectors, confidence was at or near record levels,with retailers at 90 versus 82 in the third quarter, wholesalers at 90, and new vehicle dealers at an astonishing 98, up from 87 inthe third quarter.

That the manufacturing sector was lagging was largely explainedby the impact of the rand's strength on manufacturers' ability to compete abroad, and to compete in the domestic market against imported products.

The fourth quarter survey also highlighted that business activity in South Africa continued to expand in all sectors at a higher rate than in the third quarter, while the wholesale sector was the only sector that reported sales volume growth somewhat below expectations.

All sectors except wholesale also expected the current heady growth in business activity to slow in the first quarter of 2005.

Source: Xinhua