Confidence climbing the cautiously optimistic curve

BUSINESS confidence in March recorded its single biggest jump in two years on the back of strong metal prices, increased commercial vehicle sales and a surge in the registration of defensive company names.
The IJG Business Climate Monitor climbed to 124,2. Although this is eight basis points higher than February’s figure, it is still way off the 150,8 point of March last year.

Economist Namene Kalili, who compiles the Index on behalf of the Institute of Public Policy Research (IPPR), said the Leading and Investment Indices were the main drivers of the growing confidence, jumping 18 basis points and 17 basis points respectively. International metal prices were up 20 per cent, but due to the stronger rand, local producers only saw a real growth of 12 per cent in prices.A total of 616 defensive company names, or names reserved for future use, were registered with the Ministry of Trade and Industry – the highest number of registration in nine years, Kalili said. The registration of close corporations increased by 27 per cent, while 29 per cent more companies were registered.’After three straight months of solid growth, company registrations have recovered from their two-year low of December 2008,’ Kalili said.Further support came from the sale of commercial vehicles, which totalled 696 units in March. This represents an increase of 52 per cent over February.’Businesses are not exactly diving into credit as yet, since credit extension grew modestly by 0,2 per cent,’ he said.Consumers, too, are still wary of the economic outlook. They remain somewhat cautious about spending, despite lower interest rates, Kalili said. The Consumption Index for March stood at 92,9, slightly higher than the 88,1 of the previous month. The Index has been at two-digit level since April last year.Although looking up, business confidence for the first quarter of 2009 remains considerably lower than in the first quarter of 2008, as illustrated by the table below: Q1 2008 Q1 2009Business ClimateIndex 149,6 118,0Investment Index 193,7 140,5Consumption Index 116,8 90,0Export Index 147,3 118,7Leading Indicator 199,0 148,6Coincident Indicator 133,3 99,3jo-mare@namibian.com.na