Author: Mike Schussler Source: BankServAfrica
South Africans are spending money at levels that seemed impossible only a year ago, encouraging the economy to claw its way back into a more solid growth phase. This is according to the latest BankservAfrica Economic Transaction Index (BETI).
The July BETI, which was released today, is showing record levels and continuing the upward curve that has been confirmed by this index for a number of months now. This could mean that negative forecasts for the rest of the year, based on other indices, may have to be to be upwardly revised if the trends indicated by the BETI continue.
“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,” comments Brad Gillis, CEO regulated products at BankservAfrica.
According to Gillis, the BETI reflects 84.2 million transactions for the month of July, which is the highest number of transactions in the life of this index so far. Likewise, the nominal BETI represents the highest ever monthly turnover.
This clearly indicates that South Africans are spending more money in more transactions than a year ago.
The year-on-year increase for July was 3.9%, which is an increase from the 2.8% of June 2013.
Mike Schüssler, chief economist at economists.co.za, explains after reaching a low point in March 2013, the BETI has consistently indicated a year-on-year growth that is substantially stronger. The numbers for April, June and now also July were especially strong,” he continues.
“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. Although still early days in the quarter, the South African economy is in a short-term upward trajectory if one looks at the latest BETI figures.”
Schüssler says he is confident that negative forecasts will be reviewed and a more positive outlook observed in the next few months.
“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 PMI, which has been above 50 points for four months in a row. This indicates that the manufacturing sector is back on a more positive growth path.
Furthermore, advised Schüssler, new vehicle sales were up by 7% in July from a year ago. For the first seven months of 2013, compared with the same period in 2012, the average difference is 6.8%.
“Other data that has emerged over the last few months confirms a clear positive trend in many sectors. 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 fifteen months the quarter-on-quarter electricity data will not be negative.”
Schüssler adds that the South African Reserve Bank co-incident indicator (which is only available up and till 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.
“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 are being made available are based on old information.
The BETI 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.
Contact Gerian Miller for more information: GerianM@bankservafrica.com or (011) 497 4067
Notes to the editor:
BankservAfrica is South Africa’s largest automated clearing house, providing interbank settling and clearing. economists.co.za is an economic consultancy that helped develop the BETI.
The BETI is a very fast and broad overview of current economic trends over a broad range of sectors, making use of economic transactions as captured by BankservAfrica. Like the Swift Index, the BETI is considered a “now-cast” number as a result of its speedy ability to convey the overall economic conditions to the market. Where most economic indicators can take anything between 38 and 76 days to become public knowledge, now-cast indicators take less than a month after the facts were revealed to come to the market.
The BETI is also the broadest of the “now-cast” indicators to come to the market, as it covers economic transactions across the whole economy. Very big distortive economic transactions do not form part of the BETI. This is also on its own a trend-strengthening indicative factor.