Business Confidence and the South African Business Cycle

G M Pellissier

Studies in Economics and Econometrics, 2002, vol. 26, issue 2, 51-67

Abstract: This article endeavours to compare the two business confidence indicators in South Africa (that of the BER and SACOB) in terms of their respective relationships as business cycle indicators. Although bearing the same name of business confidence indicator, totally different economic variables are measured in compiling the indices. The BER’s business confidence indicator is a psychological measurement of the level of satisfaction with prevailing business condition, while SACOB’s business confidence indicator is basically a composite coincident/leading indicator of the business cycle and by implication an indicator of business confidence. Both business confidence indicators correlate highly between themselves and show signs of having leading indicator capabilities of the South African business cycle. However, the leading indicator characteristics of both indices are not better than the official leading indicator and are also of a declining order. In terms of causality, both the indicators seem to be moving towards a coincident relationship rather than a leading one with the business cycle. Only the BER business confidence indicator displays comparable cyclical turning point attributes.

Date: 2002
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DOI: 10.1080/10800379.2002.12106331

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