Collating economic statistics not as easy as it looks
STATISTICS are supposed to capture economic trends and markets rise and fall on the signals they send out. But statistical agencies can’t do the job precisely because of innumerable problems related to collection, collation, definitions and interpretation. So the figures are regularly revised.
Stanlib chief economist Kevin Lings has provided a useful outline of recent revisions to US data on gross domestic product (GDP) since 1929.
The revisions show that the recession that lasted from the fourth quarter of 2007 to the second quarter of 2009 was not quite as bad as it seemed at the time.
The US economy shrank at an average annual rate of 2.9 percent; in the previously published estimates, the pace was set at 3.2 percent.
And the recovery was fractionally stronger than initially estimated. Lings said, for the period of economic recovery from the second quarter of 2009 to the first quarter of 2013, real GDP increased at an average annual rate of 2.2 percent; in the previously published estimates, it had been increasing at a 2.1 percent pace.
For 1929 to 2012, the average annual growth rate of real GDP was 3.3 percent, 0.1 percentage point higher than in the previously published estimates.
Lings said this type of comprehensive revision is carried out about every five years by the US Bureau of Economic Analysis. However, smaller revisions take place more frequently.
The first-quarter GDP growth figure has been revised down to 1.1 percent, from 1.8 percent previously and more than 2 percent initially. Market players who celebrated the early figure had to rethink their positions when the revisions came out.
The latest data from the US show GDP growth of 1.7 percent, annualised, in the second quarter.
The figure was better than the market’s expectations for a rise of only about 1 percent. Lings cautioned that the estimate was based on source data that were incomplete or subject to revision.
Scopa
Yesterday the standing committee on public accounts (Scopa), the parliamentary fiscal watchdog, carried out an oversight visit to the Department of Public Works’ headquarters.
According to DA Scopa member Dion George, the committee has received confirmation that the report on the state of
The first-quarter US GDP growth figure has been revised down to 1.1 percent, from 1.8 percent previously and over 2 percent initially.
corruption in the department would be tabled in Parliament.
George said his party would be submitting parliamentary questions to Public Works Minister Thulas Nxesi requesting that he provide a precise date for when the document could be expected.
“We will also request a confirmation that the entire report will be made public and that no aspects of this report will be ‘classified’ by the minister.
“This relates specifically to the department’s role in the spending of R206 million of public money on President Jacob Zuma’s private home in Nkandla.”
The report, which is part of the department’s turnaround strategy, was expected to cover aspects of corruption within the dysfunctional department including the controversial R1.7 billion lease scandal for the police headquarters, George reported.
“It is… unclear as to what the investigation’s terms of reference are and what issues were considered.”
In order for it to be viewed as “a legitimate attempt” to stamp out corruption in the department, the report must include all details including those related to senior politicians and no information must be withheld from Parliament, George said. Should this not happen, “the DA will not hesitate to push for Scopa to send the department back to compile a legitimate and thorough report”.
It is a case of “Don’t cry for me, beloved Nkandla”.
Barclays Africa
It seems that even the more resilient supporters of Absa got quite a shock from this week’s first-half results.
The share, called Barclays Africa Group with effect from today, had a pretty good run earlier this year, reaching a high of just over R171 at the end of January.
This was largely on the back of excitement about the Barclays Africa deal, expectations of a generous special dividend and optimism that the South African problems had been addressed.
Well, the Barclays Africa deal has been done, ahead of time and at a reasonably attractive price; the special dividend has been announced, at R7.03 a share, a little lower than expected and payment in November is a little later than expected; so investor focus was on the local operations.
The collapse in the share price on Tuesday and its subsequent inability to recover highlights serious concerns about the underperformance of these operations.
Johann Scholtz of Afrifocus maintains his buy recommendation on Absa but has “lowered his conviction”.
In his report on the results Scholtz says the investment case “has largely been premised on Absa’s dominant primary banked market share and the resultant economies of scale, cross-selling opportunities and access to cheap funding (lazy deposits)”.
But, says Scholtz, the continued below par transactional revenue growth does not inspire confidence in Absa’s ability to maintain its dominance in primary banked clients and to develop, maximise and maintain this “enviable asset”.
Analysts are not persuaded by management’s explanation that revenue growth in South Africa has been below par largely because of a commitment to derisking the business and in particular to avoiding the unsecured lending market. This might prove to be a valuable strategy in the long term but right now it merely encourages the view that Absa has dropped the ball. The situation for the share price could get significantly worse, or better, depending on what Nedbank reports next week.