THE IJG Business Climate Index recovered 1,7 points in February, following falls in December and January. This slight improvement was primarily driven by increases in building plans approved and company registrations, as well as an uptick in the NSX’s local index. The index stood at 163,6 points in January, and recovered to 165,3 points in February. Company registrations increased from 1 524 in January to 1 949 in February, driven by a large increase in close corporation registrations, from 1 171 to 1 534, IJG Securities and the Institute of Public Policy Research said in a report yesterday. The report said the other key driver was building plans approved, which increased from N$128,7 million in January to N$211,9 million in February. However, building plans completed remained largely unchanged, with N$25 million worth of completed plans in January and N$24 million in February. The index recovery came despite increasing interest rates, which expanded by 25 basis points following a South African Reserve Bank interest rate hike in January. As a result, interest rates are now 125 basis points from the historically low levels of 2012 and 2013. “While this is a 1,25 percentage point increase in rates, it reflects a 13,5% increase from the 9,25% prime rate seen at the bottom of the interest rate cycle, and a 22,7% increase in the repo rate from the low of 5,5%,” the report said. The report said as a result of lower than normal liquidity in the banking sector and increases in interest rates, private sector credit extension has started to see notably lower rates of growth than was the case through the bottom of the interest rate cycle. Credit extension to households expanded by 12,9% in February, while credit extended to businesses grew by just 12,2%. This compares to growth of over 20% for businesses at the same point in 2015. On a monthly basis, the investment index fell two points, while the export index fell 0,8 points. The consumption index climbed 2,1 points, while the leading and coincident indicators expanded by 2,4 and 2,5 points, respectively. On a quarterly basis, all of the indices and indicators fell, with the exception of the export index, which expanded by 3,8 points. The Business Climate Index is based on 13 broad economic indicators which are likely to impact on the domestic business environment. All indicators have the same weight, except for company registration data, which has a significantly lower weight to reduce its volatility on the overall Index. Data is collected on each indicator on a monthly basis.