Improved confidence levels and more tangible shifts in the economic environment have led to activity gaining momentum relative to previous months. Picture: Leon Lestrade / Independent Newspapers
The value of all electronic transactions cleared through BankservAfrica at seasonally adjusted real prices showed a steady recovery in October this year following September’s weaker performance.
In October, the BankservAfrica Economic Transactions Index (BETI) climbed to an index level of 136.5, reflecting a 0.3% increase from September's 136.1. This marks a 4.5% rise compared to the same time last year.
Following two months of lower volumes, the number of transactions cleared through BankservAfrica in October spiked to 167.8 million compared to 156.7 million in September, representing a 7.1% year-on-year growth and an all-time high.
The standardised nominal value of transactions increased by 1% moderately to R1 317 trillion in October 2024 from R1 303 trillion in September.
Shergeran Naidoo, BankservAfrica’s head of stakeholder engagements said this latest movement indicated the growing momentum in economic activity, confirming improved conditions since the BETI’s turning point in November last year.
“The BETI signals that the underlying momentum in the economy is picking up, reflecting improved economic conditions,” Naidoo said.
Improved confidence levels and more tangible shifts in the economic environment have led to activity gaining momentum relative to previous months.
Elize Kruger, an independent economist said the BETI was up by 4.3% when compared to the turning point in November last year, signalling that the economic recovery continues to unfold.
Kruger said consumers were currently experiencing moderating consumer price inflation, slightly lower interest rates, and real increases in salaries and wages, all of which should contribute to an improvement in purchasing power in the fourth quarter.
An additional tailwind is the potential that some of the proceeds from the two-pot retirement withdrawals could boost retail spending.
At the end of October, the South African Revenue Service indicated that 1.7 million individuals had applied for just short of R30 billion worth of withdrawals. These factors combined are likely to contribute to brisk retail spending during November, which also includes Black Friday.
“Overall, these favourable conditions are expected to drive a strong year-end finish, particularly in retail spending, bringing a positive boost for the economy,” Kruger said.
The authors of the index said consumer inflation has moderated from 5.9% in last year to 3.8% in September this year. The forecast for October was 3.0%, the lowest since February 2021 and aligning with the mid-point of the South African Reserve Bank’s (SARB) 3-6% target band, and open more room for lower interest rates in the next few Monetary Policy Committee meetings.
Provided no unexpected developments arise locally and abroad, interest rates are forecast to reach a level of 7.0% by the middle of next year and reflect cumulative relief of 125 basis points in a fairly shallow cycle.
“The potential impact of Donald Trump’s recent victory in the USA Presidential Elections is likely to be more of a medium-term factor and should not derail our near-term expectations for interest rate developments in South Africa,” they said.
Other economic indicators confirm the unfolding economic recovery with the seasonally adjusted Absa Purchasing Managers’ Index (PMI) at 52.6 points in October this year had a second consecutive reading above 50, a first since the positive streak in late 2022 and early last year, suggesting near-term upside for the manufacturing sector.
BUSINESS REPORT