SARB cycle indicator weakens
The SA Reserve Bank's leading business cycle indicator continued its weakening trend in March, First National Bank (FNB) said on Tuesday.
"On a month-on-month basis, the indicator declined again in March to the tune of -0.47 percent, while the smoother three-month moving average was also negative to the tune of -0.25 percent," FNB household and property sector strategist John Loos said.
Negative contributors to the decline were commodity prices for the country's major exports.
"However, this month, the leading indicator of South Africa's major trading partners contributed positively, as the global economic recovery continued on its way," Loos said.
"Other negative contributing factors included the level of job advertisements, building plans approved, the spread between long- and short-term interest rates [10-year government bond yields minus the rate on three-month Treasury bills, which speaks to interest rate expectations], and weak vehicle sales numbers."
Other positive factors, which included JSE share prices and average hours worked per factory worker, could not outweigh the negatives.
Year-on-year the indicator declined by -2.36 percent in March, marginally down from a -2.7 percent decline in February.
"The further year-on-year decline continues to support our view of increased financial pressure on the household sector in the near-term, which can have implications for both credit health as well as household-related lending growth," said Loos.
"Therefore, although the rate of decline in the leading indicator did not accelerate in March, the ongoing monthly decline continues to point to a weak household sector financial performance, caused by a flat economy."
- Sapa