Does the South African business community have a newfound spring in its step after limping along a minefield of economic crises?

Sort of.

After plumbing depths last recorded during the height of SA’s recession, business confidence looks to be moderately on the up, according to the South African Chamber of Commerce and Industry’s (Sacci’s) business confidence index.

The index on Monday moved up to 96 in July, from 95.1 in June.

Strong business confidence correlates with an increased appetite for investment by the private sector.

At the end of March, however, nonfinancial private companies had R725bn on deposit in South African banks, up from R670bn a year earlier, Reserve Bank data showed.

Companies are hoarding cash or expanding abroad — put off by a stagnating economy, power shortages, low commodity prices and slower growth in export markets. Delays in passing business regulations are compounding their unease.

Sacci CEO Alan Mukoki said although global and local conditions are improving, there were many uncertainties — including what would happen at hung municipalities and the timing of the next US interest rate hike, which would have a bearing on the rand.

The other variables that will affect sentiment among business include local interest rates, the state’s ability to deliver on infrastructure spending amid rising borrowing costs and the oil price. The firmer rand, slightly higher commodity prices and exports, and better retail sales all helped buoy business confidence — some of the very factors companies have cited for snubbing investing in SA.

Improved energy supply also lifted confidence, Eskom having managed to keep the lights on. Sacci has, however, called for caution to be exercised on "vulnerable economic issues," especially with SA facing the prospect of a rating downgrade in December.

"We don’t know how monetary authorities will respond to factors like union members who get above-inflation wage settlements. We also don’t know if government will be able to deliver on its outstanding infrastructure spending with borrowing becoming more expensive," he said.

An interest rate hike in the US could weaken the rand, which in turn can have a negative effect on the inflation outlook and may support further rate increases by the Reserve Bank.

A concerted effort was needed to avoid even tighter economic conditions in 2017 because lower growth would put pressure on public finances, unemployment and the cost of borrowing, Sacci said.

Economic growth is expected to be closer to zero in 2016 and just around 1% in 2017.

Sacci’s index is based on developments around 13 economic indicators — including energy supply, manufacturing, exports, imports, vehicle sales, retail sales, the construction of buildings, inflation, share prices, real private sector borrowing, real financing cost, precious metal prices and the rand exchange rate.

There were marginally fewer impediments in the real business environment in July compared to June, Sacci said.

At 96 in July 2016, the index was still lower than the 101.8 recorded in July 2015, suggesting that business confidence is yet to fully recover.

With Bloomberg