The Durban Business Confidence Index shows a 59% increase compared to the same period last year.
Image: Doctor Ngcobo / Independent Newspapers
Durban’s business community is experiencing a significant confidence boost, as the latest Business Confidence Index (BCI) for Q4 2024 reached 60.74 index points, reflecting an impressive 59% year-on-year increase.
The index, a key indicator of business sentiment, is compiled by the Macroeconomics Research Unit at the University of KwaZulu-Natal, offering valuable insights into how local entrepreneurs perceive the economic environment.
This surge in confidence follows a much lower index of 38.12 points recorded in Q4 2023, suggesting a positive shift in the city’s business outlook.
The improvement is a sign of relatively stable macroeconomic environment and interventions to revive Durban are yielding positive results.
Following two successive improvements, the Durban BCI lowered to 60.74 in Q42024 from 63.01 in the previous quarter which a 3.6% deterioration in confidence in the city’s economy.
Despite this decline, business confidence remains bullish, staying well above the 50-point mark, and pointing to a positive outlook on business conditions in the city.
While the Durban BCI generally moves in the same direction as the national BCI, in the present period, the two indices moved in different directions. The national BCI changed from 38 index points in 2024Q3 to 45 in 2024Q4.
The drop in business confidence in Durban may be driven by various factors, including political developments that can put the sustainability of the current government arrangements at risk, particularly in KwaZulu-Natal.
The Durban BCI has consistently stayed above the national index compiled by the Bureau of Economic Research (BER). The reported overall business confidence index masks significant diversities across various sectors.
For example, the manufacturing sector reported a decline from 62.94 index points in 2024Q3 to 55.54 in 2024Q4, while the transport, storage, and communication sector reduced from 76.90 in 2024Q3 to 70.58 in 2024Q4.
The transport, storage, and communication sector reduced from 76.90 in 2024Q3 to 70.58 in 2024Q4., according to the Durban Business Confidence Index.
Image: Tumi Pakkies
The current easing of financial as well as global macroeconomic conditions, among others, continues to boost business confidence in the following sectors:
- Financial intermediation
- Insurance
- Real estate
- Business services
Business confidence in these sectors grew by 17% from 57 index points in 2024Q3 to 67.69 in the following quarter.
The wholesale and retail trade sector which includes the repair of motor vehicles, motorcycles, personal and household goods, catering as well as accommodation saw an improvement in business confidence from 67.12 index points in 2024Q3 to 67.34 in 2024Q4.
This represents a 0.33% increase in confidence which can be attributed to the typical rise in demand in the last quarter of the year associated with the festive season.
On the other hand, the construction sector experienced a marginal decline in business confidence in 2024Q4 to 66.25 index points from 68.91 in 2024Q4.
The wholesale and retail trade sector which includes accommodation saw an improvement in business confidence from 67.12 index points in 2024Q3 to 67.34 in 2024Q4.
Image: Leon Lestrade African News Agency (ANA)
The electricity, gas, and water supply sector reported a lowering in business confidence from 75.24 index points in 2024Q3 to 69.46 in the last quarter of 2024.
Durban saw a drop in business confidence in the fourth quarter of 2024 compared to the third quarter of the same year, however, it is still above the 50-point mark which suggests a sustained and robust confidence in the city’s business climate.
Plus, confidence in the Durban improved substantially by 59% year-on-year which suggests that business conditions in 2024Q4 were far better compared to the same quarter in 2023.
This is a sign that interventions put forth by the government to revitalise Durban are now yielding positive results.
"Hence, we hold the view that proactive measures such as promoting Durban and revitalising its infrastructure, and a relatively stable macroeconomic environment, among others, are crucial for sustaining long-term business confidence in the city," the report said.
IOL Business