Business climate index continues upward trend
The IJG Business Climate Index gained a further 5.2 points in the month of July buoyed by a robust growth in local investment and an improving consumption index.
According to the Institute of Public Policy Research, producers of the monthly index, the investment index rose for the third consecutive month as business borrowing increased 17% year on year after strong growth in short-term borrowing instruments.
The NSX local index continued on its impressive growth path ending the month 25% higher than in the same period last year.
With consumers borrowing more money from financial institutions, particularly in the form of mortgages and buying 24% more cars than a year ago, the consumption index reached its highest level in almost seven years remaining above the 100 index point mark for the past five consecutive months.
The export index moved up slightly from the previous month (by 0.6 index points) as fish and red meat prices showed modest improvements. However, metal exporters did not fare that well. Copper prices are down 9% from the same period last year while uranium prices are down 30%.
Although the struggling local currency did cushion the effects of these weaker international prices, the export index still fell 7% year on year while the international trading environment remains volatile despite mild improvements in international leading indicators.
Looking ahead, the business climate is expected to improve over the next six months as the local leading indicator gained 8.4 index points due to strong growth in building plans passed and commercial vehicle imports.