BUSINESS confidence is at a five-year low as weak demand weighs on company sales volumes and profit.

The Bureau for Economic Research’s (BER’s) business confidence index fell two points to a five-year low of 36 in the fourth quarter after falling to 38 in the third quarter, BER’s sponsor, Rand Merchant Bank (RMB), reported.

Falling business confidence suggests lower investments and job creation by the private sector.

The latest index result suggested that real gross domestic product growth moderated further in the fourth quarter compared with the same period last year, RMB chief economist Ettienne le Roux said.

"In aggregate, growth of about 1% to 1.5% seems like the most probable outcome for this year, with a very similar prognosis for 2016 at this stage. And all this of course assuming that the current drought does not get any worse," Mr le Roux said.

Confidence is a full 15 points lower over the past year.

Businesses in five key sectors are surveyed before the index is compiled. Confidence has fallen among new vehicle dealers, building contractors and wholesalers.

Confidence among retailers is up, but remains at low levels. Weak demand forces many retailers to trim price increases, according to RMB.

Manufacturing confidence is unchanged as production growth continues to track sideways at weak levels.

Businesses were surveyed between October 19 and November 16 just before the Reserve Bank raised interest rates on November 19. Confidence would probably have been worse had the survey been done after the rate hike.