BankservAfrica Economic Transactions Index (Beti), an indicator of underlying economic trends in the country, released on Wednesday, declined in August for the third consecutive month, signalling the ongoing strain on the broader economy.
The index tumbled to an eight-month low in August.
Shergeran Naidoo, BankservAfrica’s head of stakeholder engagements, said the index level moderated further to 131.6, significantly lower than the all-time high of 143.1 reached just three months ago in May.
“The level in August is also the lowest since the 130.6 reading in December 2021,” Naidoo said.
This is as the standardised nominal value of bank transactions cleared through BankservAfrica last month was R1.144 trillion, while the number of transactions increased to 136.2 million from 130.4 million in July.
Despite showing monthly growth of 4.4 percent, the number of transactions was still 2.1 percent lower than a year earlier, given the high base of comparison.
On an annual basis, the Beti contracted by 1 percent last month compared to the revised 5.3 percent in July.
This u-turn in trend could be ascribed to the high base for August last year, which spiked by 4.3 percent following the riots in KwaZulu-Natal and Gauteng, affecting the Beti in July 2021, she said.
Independent economist Elize Kruger said the monthly contraction in the Beti was not unexpected as the economy continues to suffer from recurring load shedding, significant rises in fuel and food prices and further increases in interest rates.
“The global economy is struggling with similar headwinds, resulting in an extremely challenging 2022 with weak economic momentum,” Kruger said.
Other local indicators presented a mixed picture of the economy and a fair dose of monthly volatility.
After plummeting to 47.6 in July - the lowest since July 2021 due to the high intensity of load shedding - the Absa Purchasing Managers’ Index (PMI) rose strongly to 52.1 in August, also partly reflecting the return of vehicle production at the Toyota plant after flooding disrupted activity in April.
The S&P Global South Africa PMI remained above the 50-level but moderated to the lowest level in three months in August, with the report citing signs of a slowdown in consumer demand.
Total new vehicle sales powered ahead, rising by 14.4 percent year-on-year in August, reflecting ongoing pent-up post-Covid demand and a recovery in production. Year-to-date new vehicle sales were a healthy 13.8 percent higher than a year ago.
However, the recently released RMB/BER Business Confidence Index (BCI) for Q3 2022 eased from 42 in quarter two to 39 in quarter three.
Meanwhile, the FNB/BER Consumer Confidence Index clawed back 5 index points to reach -20 in quarter three 2022, after plunging from -13 to -25 during quarter two.
Kruger said that in the light of the multiple headwinds, it appeared the economy was simply unable to gain synchronised momentum across all sectors in the short term, and the country would continue to experience a ‘muddle-along’ scenario.
BUSINESS REPORT