- This topic is empty.
Viewing 1 post (of 1 total)
-
Posts
-
The BankservAfrica Economic Transactions Index (BETI) continued showing falling monthly levels in October 2022, reflecting the ongoing strain in the local economy.
While the BETI already signalled the probability of an economic contraction in Q3, the first indications for Q4 do not look encouraging either.
“The monthly decline in the BETI reached the lowest index level this year of 130.7 in October 2022, which is vastly different to the 143.3 level reached in May,” said Shergeran Naidoo, BankservAfrica’s Head of Stakeholder Engagements.
On an annual basis, the BETI increased by a mere 1.0% in October 2022 vs a revised increase of 1.5% in September. Though just a marginal monthly decline (-0.2%) in October, the BETI has now declined for five consecutive months, reflecting the troubling months in the broader economy.
According to independent economist Elize Kruger, a scenario of ongoing strain is playing out in the South African economy, with the triggers being the only difference from month to month.
While September experienced the worst-ever month of load shedding in South Africa’s history, October was characterised by a crippling strike at the state-owned logistics enterprise, Transnet.
Business Unity South Africa (BUSA) noted that the 12-day Transnet strike’s cumulative impact has rung up a logistics cost of about R7 billion, as goods worth R65.3 billion stood idle, with a significant portion of the losses likely never to be fully recovered.
“On top of the recent strike action and ongoing load shedding, the economy has also been buckling under the significant rise in the cost of living,” said Kruger.
Stemming the tide of rising prices, the South African Reserve Bank subsequently increased interest rates by a cumulative 275bp since November 2021, adding further strain to consumers with debt exposure. Many may be impacted further by the expected rate hike following the next MPC meeting at the end of November.
The lack of economic momentum, as reflected in the BETI, has been mirrored in other local nowcasting indicators in recent months.
-
The Absa Purchasing Managers’ Index (PMI) dropped from 52.1 in August to 48.2 in September but recovered again to a 50-level in October.
-
The energy-intensive manufacturing sector has been particularly hard hit by ongoing load shedding and is clearly unable to gain any meaningful momentum.
-
The S&P Global South Africa PMI, which reflects activity in the broader private sector, ticked up marginally to 49.5 in October from 49.2 in September but remains in contractionary territory.
-
Business conditions in the South African private sector deteriorated for the second consecutive month in October, as load shedding and sharp inflationary pressures continued to dampen activity and demand.
-
Vehicle sales also lost momentum in October.
Global headwinds are also impeding growth, BankservAfrica said.
The JP Morgan Composite PMI for October signalled that the downturn in global economic activity extended into its third successive month, with the service sector re-joining manufacturing in the contraction territory.
Business optimism dipped to a 28-month low as new order intakes and international trade flows continued to dwindle from heightened economic, inflationary, and political pressures.
Meanwhile, the standardised nominal value of transactions cleared through BankservAfrica in October 2022 was R1.16 trillion, while the number of transactions increased marginally to 138 million from 136.2 million in September.
Although showing a marginal monthly growth of 1.3% in October, the number of transactions was still 9.5% higher than a year earlier. While the number of transactions continues to grow, the average value per transaction has been moderating in recent months.
“The South African economy remains woefully unable to gain synchronised momentum across all sectors in light of all the challenges, and we will continue to experience a ‘more-of-the-same-muddle-along’ scenario,” Kruger said.
-
Viewing 1 post (of 1 total)
- You must be logged in to reply to this topic.