Business confidence in South African remained strong even though the business confidence index for August declined by 0.1 index point, the SA Chamber of Business (Sacob) said on Tuesday.

The BCI dropped marginally from 99,1 index points in July to 99,0 in August, Sacob economist Richard Downing said in a statement. He said the BCI has been “quite consistent over the past two years” as it averaged 100.2 with a standard deviation of only 1,4 index points over the period.

“Despite the slight decline that the index reflects since April 2006, business confidence remains strong ...," Downing said in a statement posted on the chamber's website on Tuesday.

However, he said, there were economic developments that suggest a tightening of economic conditions associated with a more stringent policy stance in the short to medium term.

"Indications in the economy, however, suggest that business might find the going less comfortable over the short to medium term as the financial environment and domestic household demands tighten," he said.

He, however, warned that the corrections needed should not be left to the "endogenous process" itself.

"Time will be of the essence as serious structural imbalances cannot be afforded and must be avoided.

"Such structural imbalances, if not addressed in time, could prolong the adjustment and affect business for a longer period," Downing said. - Sapa