The South African interbank transactions under R5 million declined significantly in October on both a monthly and quarterly basis. This is according to the BankservAfrica Economic Transaction Index (BETI).
“The month also reflected the most negative quarterly comparison for the BETI, declining by 1% on the quarter from July. The quarterly comparison has been in decline for six months in a row,” according to Dr Caroline Belrose, Head of Fraud and Data Analytics at BankservAfrica.
On a month-on-month basis, the decline was 0.9% between September and October – the same as September and August 2016, states Dr Belrose.
The BETI, which is usually a good barometer of growth trends within the economy, suggests a further decline in the South African economy more than before.
“If economic activity levels decline again, it will be the second quarter this year in which the South African economy shrinks,” says Mike Schüssler, Chief Economist at Economists dotcoza. He adds that October’s results at the start of Q4 suggests weaker growth in 2017. The last three months leading into 2017 usually forecasts the economy’s performance in the new year.
This sentiment is in line with the latest manufacturing Purchasing Managers’ Index, which indicates the manufacturing sector is in a state of decline. This, together with the latest take-home salary levels, which are impacting retail sales, along with new car sales and real estate, are further indications of the economy’s downward movement.
“Although it is still too early to say that GDP growth in Q4 will be negative – it is evident that Q3 will be weaker than that experienced in Q2. This is clear from the BETI data as well as other sources of economic data,” explains Schüssler.
The standardised transactions and volumes data
The standardised transaction fell to R764.7 billion in October from R774 billion in September, according to Dr Belrose. The number of transactions in the BETI was just over R88.4 million in October, lower than the previous month and that experienced a year ago.
Overall transaction volumes have also been in three months of total of decline in 2016. “This alone reflects the South African economy’s weakness,” ends Schüssler.