South Africans 'starting to spend again'
Category Newsflash
South Africans are spending money at levels that seemed impossible only a year ago, the latest BankservAfrica Economic Transaction Index (BETI) shows, suggesting that the economy may be working its way back into a more solid growth phase.
The July BETI, released on Wednesday, shows record levels while continuing an upward curve sustained for a number of months now.
"While one ray of sunshine does not make a summer, the fact remains that the BETI has now seen improvements, in real terms, in five out of the last seven months of 2013," Brad Gillis, CEO for regulated products at BankservAfrica, said in a statement.
According to Gillis, the BETI reflects 84.2-million transactions for July, the highest number of transactions in the life of the index so far, while the nominal BETI represents the highest ever monthly turnover, clearly indicating that South Africans are spending more money in more transactions than a year ago.
Mike Schussler, chief economist at economists.co.za, said that after reaching a low point in March, the BETI has consistently shown strong year-on-year growth, with especially strong numbers for April, June and July.
"The July BETI indicates that the third quarter GDP figures are also likely to be a lot stronger than most people have predicted until now," Schussler said in the BankservAfrica statement.
"In 2012, the BETI was the first South African indicator to show that the economy was stagnating, and we believe that, in 2013, the BETI is also the first South African indicator to show that the South African economy is finally getting out of its stagnation period - at the very least in the short term."
Factors supporting BETI data
The growth in the July BETI numbers is supported by the latest Purchasing Managers' Index (PMI), which has been above 50 points for four months in a row, indicating that the country's manufacturing sector is back on a more positive growth path.
New vehicle sales were also up by 7% in July from a year ago, and for the first seven months of 2013, compared with the same period in 2012, were up by 6.8%.
"Other data that has emerged over the last few months confirms a clear positive trend in many sectors," Schussler said. "Retail sales were much stronger than expected in May, while manufacturing data over the last quarter has really outperformed many expectations.
"Even mining, which was in the doldrums before, is showing increasing production, together with electricity production. For the first time in 15 months the quarter-on-quarter electricity data will not be negative."
Schüssler added that the South African Reserve Bank co-incident indicator (which is only available up until April) is also showing the first signs of a turnaround in the economy.
"The South African economy has now been growing for 47 months in a row, which is still the second-longest growth performance in many a decade," he said.
"Commodity prices have turned downward and, whilst some dark clouds remain, the fact that developed countries are showing better economic growth helps the South African economy along on a more positive growth path. This is partly due to a weaker rand and low interest rates."
Schüssler cautioned against being too pessimistic about the economy, since many numbers that were being made available are based on old information.
The BETI, according to BankservAfrica, is the biggest near real-time economic indicator of the South African economic performance, and is again leading the turning points by about a month. "It is also the broadest and fastest indicator of economic activity in the country's economy, representing roughly 25% of all economic turnover," the company said.
Author: The Good News - South Africa
