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Retail Survey

According to the 2019Q1 BER Retail Survey, business confidence among retailers fell back after recovering somewhat in 2018Q4. Current activity levels remain subdued, while the numerous headwinds facing the consumer makes a meaningful recovery unlikely.

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After remaining largely unchanged in 2018Q4, the FNB/BER Civil Confidence Index shed 8 points to register its lowest level ever of 10. Confidence was lower largely on the back of weaker activity growth, which also weighed on profitability.

The seasonally adjusted Absa Purchasing Managers’ Index (PMI) fell to 45.0 points in March from 46.2 in February. This was the third consecutive month of decline. As was the case in February, two of the PMI’s major subcomponents came in above 50 points, while three were stuck in negative terrain. However, all but one of the main subindices declined compared to February.

A broad-based weakening in activity pushed confidence down to worrying lows. The RMB/BER BCI declined by a further three points to 28 in the first quarter of 2019. This is the lowest level since the 27 index points recorded in the second quarter of 2017, and before that, the deep recession of 2009. Striking in the first quarter results is how broad-based the weakness in activity has become. Since taking over the reins, President Ramaphosa has launched several initiatives to help reverse South Africa’s decline. But more than this is necessary to get South Africa out of its low-growth bind. Forceful, and in some instances, unpopular structural reforms must also form part of the mix.

After falling sharply in the third quarter of 2018, the FNB/BER Consumer Confidence Index (CCI) held steady during 2018Q4. Consumer sentiment settled at a much lower level during the second half of 2018 compared to the extraordinarily positive numbers booked at the height of Ramaphoria. Nevertheless, the latest reading is still above the long-run average reading for the CCI, suggesting that most consumers are fairly optimistic with respect to the outlook for the SA economy and their own household finances. However, order for a more enduring and significant improvement in consumer spending to take hold, household income and credit growth will also need to accelerate.