The business climate weakened in November on the back of rising international fuel costs, fewer company registrations and a weak outlook for the construction industry as reflected in the building index.
The IJG Business Climate Index for November fell 7.5 basis points after an impressive run during the third quarter of 2012. The Institute for Public Policy and Research (IPPR) produces the monthly index as an indicator of the business climate in the country.
Consumer confidence also took a knock as international fuel prices began to rise. The exchange rate did not provide consumers with much relief on the imported fuel price and it is thus only a matter of time before local pump prices are adjusted upwards.
The IPPR says as much as the business climate remained favourable, both consumers and the business community are somewhat hesitant to invest and consume given that the economy contracted during the third quarter of last year.
"This is more in line with international leading indicators which have been shaky at best. The weaker leading indicator suggests that the business climate may deteriorate six months down the line", reads the monthly report.
"This outlook depressed business appetite for investment and therefore the investment index shed 3.3 basis points on the back of fewer company registrations and fewer building plans completed," the monthly report further says.
The export index moved sideways as metal exporters enjoyed a 6 percent increase in the price of zinc and copper, while uranium exporters enjoyed their third increase in the commodity's price in 2012.
Fish prices continued to trend upwards particularly the skin-on-fillets which rose 7 percent in the month, while red meat prices contracted marginally. Overall, a degree of weakness is beginning to affect the index over the short to medium term.