The payments clearing platform BankservAfrica said the slight improvement in its Economic Transactions Index occurred against a fairly grim economic context in April of load shedding continuing unabatedly, interest rates and inflation remaining at elevated-levels, and the global economic slowdown still prevalent.
Therefore, the slight improvement signals the South African economy’s resilience, despite the ongoing challenges.
While the BankservAfrica Economic Transactions Index (BETI) increased in April 2023 to an index-level of 132.6, tracing back to the January, 2023-level (132.9), it was still notably lower than a year earlier.
The increase came after two consecutive monthly declines, and measures the economic activity in the country.
Shergeran Naidoo, BankservAfrica’s head of stakeholder engagements said the BETI reached an index-level of 132.6 in April this year almost on par with the level of 132.9 tracked in January. “However, on an annual basis the BETI declined by 3.5%,” Naidoo said.
Elize Kruger, an independent economist, said in the past nine months the BETI had moved mostly sideways with some volatility from month to month, and confirmed that the economy remained in a “muddle-along-little-thriving” narrative, which was also evident in other indicators.
After having moved sideways in December, last year (53.1) and January this year (53.0), the Absa Purchasing Managers’ Index (PMI) plummeted to 48.8 index points in February. It fell further to 48.1 in March, before recovering to 49.8 in April. April was the third straight month that the index pointed to a deterioration in business conditions in the manufacturing sector.
The S&P Global South Africa PMI also signalled dismal economic activity in the private sector, dropping from 50.5 in February to 49.7 in March, and further to 49.6 in April, remaining below the 50.0 neutral mark.
According to the report, business activity at South African firms continued to contract at the start of the second quarter, as a slight lift in demand was more than offset by capacity constraints from load shedding and supply shortages. The resilient vehicle market has also faltered since March.
The motor industry sold 37 107 cars and commercial vehicles in April -0.2% fewer than in the corresponding month last year. Passenger car sales took the biggest knock, dropping 6.0% y/y from 31 631 to 24 174 in April, this year.
On the global front, April saw a further marginal increase in global manufacturing production, as improved supply chain conditions and the clearance of existing backlogs offset weaker demand.
The JP Morgan Global Manufacturing PMI, however, remained unchanged at 49.6 in April, the eighth successive month below the neutral 50.0 mark, signalling ongoing strain in the global manufacturing sector.
However, the broader JP Morgan Global Composite Output Index rose to 54.2 in April, up from 53.4 in March, signalling expansion in each of the past three months.
According to the index authors, clearly, this was not a synchronised global recovery across all sectors, though pockets of growth were evident.
The standardised nominal value of transactions cleared through BankservAfrica in April was R1.22 trillion compared to March’s R1.19 trillion, while the number of transactions moderated from an all-time high of 149 million to 135.9 million in April, Naidoo said. This was said to be partially due to the many public holidays in April.
The average value of transactions covered by the BETI has declined over time, especially in the past six months. In April, the average value was 6.4% lower than the average recorded a year earlier. This was said to be confirming the growing trend in electronic payments.
Kruger said while the BETI reflected a small increase in April, the other indicators confirmed their doubts that this was the start of a notable recovery phase for the economy. “South Africans should prepare themselves for ‘more of the same’ for a longer period than hoped for,” Kruger said.
Last week, the FAO Food Price Index (FFPI) averaged 127.2 points in April, up 0.8 points (0.6%) from March, and standing 31.2 points (19.7%) below its value in the corresponding month last year.
The slight rebound in the FFPI in April was led by a steep increase in the sugar price index, along with an upturn in the meat price index, while the cereals, dairy and vegetable oil price indices continued to drop.