Sarb's leading indicator paints long contraction
The bank said its composite leading business cycle indicator also decreased by 0.4 percent on a month-to-month basis in March 2019.
Sarb said two of the nine available component time series decreased while seven increased in the period.
“The negative contributions to the movement in the composite leading business cycle indicator in March came from a decrease in the number of residential building plans approved and a deceleration in the twelve-month percentage change in job advertisement space,” Sarb said.
“The largest positive contributions resulted from an acceleration in the twelve-month percentage change in the number of new passenger vehicles sold and an increase in the South African produced export commodity price index (US dollar based).”
Statistics SA is expected to release its inflation print today ahead of the conclusion of the Sarb’s Monetary Policy Committee (MPC) meeting tomorrow which will culminate in the interest rate decision. The consumer price index (CPI) increased to 4.5 percent in March 2019 from 4.1 percent in the previous month, the highest inflation rate since December amid a sharp rise in fuel prices.
Investec chief economist Annabel Bishop said Sarb was likely to acknowledge the previous lowering of inflation expectations, and actual CPI inflation since 2016 in general, at this week’s MPC meeting. “However, it is also likely to make quite clear its monetary policy is not reactive, but rather forward looking instead.”