SARB indicator shows improved economic activity in September

Economic activity in September increased for the first time in three months, and by the most since May 2021.

The Reserve Bank’s composite leading business cycle indicator, released on Tuesday, which offers a projection of SA’S economic growth cycle for the next six to 12 months, shows momentum in economic activity increased by 1.4% in a month, rebounding from a 2.3% fall the previous month.

The data shows that five of the nine available component time series increased, while the remaining four decreased.

The largest positive contributors were a rise in the sixmonth smoothed growth rate of job advert space and a higher number of residential building plans approved.

The largest negative contributors were a deceleration in the six-month smoothed growth rate of new passenger vehicle sales and slower y/y growth in the composite leading business cycle indicator for SA’S main trading partner countries.

The indicator is compiled with the Bureau for Economic Research and calculated on the basis of building plans approved; new passenger vehicles sold; the commodity price index for main export commodities; an index of prices of all classes of shares traded on the JSE; job advertisements; volume of orders in manufacturing; real money supply (comprising currency, demand deposits and other liquid deposits such as savings); average hours worked per factory worker; and interest-rate spread.

The composite leading business cycle indicator of major trading partner countries, business confidence index and gross operating surplus as a percentage of GDP are included.

The positive thrust suggests Q3 GDP may grow by 0.4%, said Investec chief economist Annabel Bishop. She warned growth was likely to slow materially in 2023, to 1.3%.