SARB business cycle indicators show signs of recovery for SA economy

The SA Reserve Bank's indicators showed increases in eight out of 10 components.

On 22 September, the SA Reserve Bank (SARB) released its business cycle indicators, stating that there are early signs the SA economy is slowly starting to recover. 

Of the indicators, which are used to forecast the direction of the economy, the composite indicator increased by 2.6 percent month-on-month for July.  

In July, eight out of 10 components also recorded increases, the largest contributor being the number of residential building plans approved, as well as the RMB/BER Business Confidence Index, which increased from a low of five in the second quarter to 24 in the third quarter. 

On a month-on-month basis, June was the first month to show an uptick since November. 

The composite indicator, which gives an early reading on GDP, increased by 3.7 percent on a month-on-month basis for June. It was supported by increases in retail and new vehicle sales, as well as industrial production, as economic activity improved after lockdown restrictions eased. 

On a year-on-year basis, economic activity for June fell by 32.3 percent. May’s economic activity was revised to -34.9 percent and in April economic activity was down 33.2 percent. 

The lagging indicator, which indicates whether a shift has happened, increased 2.1 percent month-on-month in June. 

SARB also expects a yearly contraction of 8.2 percent.