The BankservAfrica Economic Transactions Index (BETI) moderated in June 2022 after a strong equivalent reading the month before, which could be an early sign of impending strain in the economy, Shergeran Naidoo, BankservAfrica’s Head of Stakeholder Engagements said yesterday.
The BETI for June 2022 moderated to 5.3 percent higher than a year ago, which was down significantly from the 9.4 percent in May 2022.
Following revisions for seasonal factors, the actual index level moderated to 136.7 in June, after an all-time high of 143.0 (revised lower from 143.5) reached in May.
Independent economist Elize Kruger said the slowing was not unexpected in light of the headwinds that had surfaced in the economy over recent weeks - from recurring load shedding to the significant rises in fuel, food and general inflation increases.
“Despite these developments, the index still suggests the momentum in the economy might have been stronger than generally perceived in the second quarter. The BETI still rose 3.9 percent compared to the previous quarter,” she said.
Other indices represented a mixed bag for June.
Similar to the BETI, the Absa Purchasing Managers’ Index moderated to 52.2 index points compared to 54.8 in May (still lower than the 60.0 in March), suggesting a partial recovery in manufacturing following the impact of the flooding in KwaZulu-Natal in April and ongoing load shedding.
In contrast, the S&P Global South Africa PMI, which reflects activity in the broader economy, recovered in June, from 50.7 in May to 52.5, the highest index level in just more than a year.
New passenger car sales also powered ahead, rising by a significant 20.6 percent year-on-year in June 2022, probably reflecting pent-up post-Covid demand.
The BETI index authors said the latter two indicators confirmed their forecast that GDP growth in the second quarter could emerge stronger than market expectations.
A number of factors had cushioned the South African economy from growing negative forces. Although off its peaks, many commodity price levels had remained elevated given the impact of the ongoing conflict between Russia and Ukraine.
These high price levels continued to support the mining sector and others such as transport.
Furthermore, there had been some job creation in the first quarter with the number of employed people rising by 370 000. This would likely boost consumer spending in subsequent quarters, in combination with the extension of the R350-a-month social relief of distress grant to the 2023 fiscal year.
Furthermore, the relaxation of Covid-19 restrictions on gatherings had benefited many industries as the continued reopening of the economy and further easing of international travel regulations provided relief to the tourism, hospitality and accommodation sectors.
BUSINESS REPORT