“Business confidence continues to be vulnerable to negative influences from both the domestic as well as the international environments,” it said as it released its Business Confidence Index (BCI) for July.

“The July 2012 Sacci BCI reflects the net results of such business climate impact.”

The BCI declined by four index points to 90.9 in July 2012, from 94.9 in June. It had previously risen by 2.1 percentage points in June from 92.8 in May.

“The July reading for the BCI is a 12-year low, and is down more than eight points on a year ago. The latest move in the BCI indicates that business confidence remains highly fragile and unpredictable.”

June’s improvements had been largely reversed in July, with four out of seven sub-indices for the real economy less favourable.

Most sub-indices for the financial environment were neutral.

Only three sub-indices out of the 13 making up the index were favourable, while four were neutral.

However, on an annual basis, seven out of the 13 sub-indices improved in July, with one unchanged.

Sacci noticed with concern the slowdown of economic growth on a global scale and the widespread downward revision of expected growth rates for South Africa.

“This is especially concerning when the effect this will have on trade and the current account of the balance of payments is considered,” it said.

“Given the uncertain outlook for international trade, a growing trade deficit may have further adverse economic consequences.”

Foreign trade remained a key contributor in supporting and nurturing local business confidence, it said.