After reflecting slow decline during the past couple of months the trend in the NMBBCI recovered slightly in September being supported during the month by unexpectedly strong demand for both new cars in the metro and the total new car market in the country. Improved performance in retail sales in the Eastern Cape and some slight improvement in the underlying trend in the real values of both imports and exports also assisted the index.
Despite significant volatility on financial markets the months of August and September yielded some more encouraging data for the South African economy. In August, while influenced by base effects in 2010, manufacturing production in the country increased by 5,6 percent when compared with August 2010, recovering from the revised negative growth of 6,2% recorded in July 2011. Also in August and while also influenced by base effects, retail trade sales in real terms increased by 7,1 percent year-on-year, and more significantly, was the fact that real retail trade sales for the three months ended August 2011 reflected an increase of 4,1 percent when compared with the three months ended August 2010.
To receive the Nelson Mandela Bay Business Confidence Index (formerly the Porth Elizabeth Business Confidence Index) compiled by Dr Neil Bruton of RGT Smart Ltd, contact the Nelson Mandela Bay Chamber of Business.
However, despite somewhat more positive data for August and September, following the disappointing second quarter 2011 GDP growth of only 1.3 percent and with the probability that the third quarter will also yield subdued GDP growth performance, growth forecasts for 2011 have generally been pulled back from nearly four percent to around three percent or less. Public sector GDP forecasts have also been revised downwards to 3.1 percent for this year, with a slightly higher 3.4 percent for 2012.
With regard to the details of the NMB BCI, the trend cycles in seven of the sub-indices reflected improvement, seven reflected deterioration, and one moved sideways.
The indicators that supported the NMB BCI through September included the trend cycle in the price of gold which continues to assist the index. The underlying trend cycle in the new car market in the Metro reflected encouraging growth as did the trend cycle in the total new vehicle market in the country. The trend cycle in the value of real retail sales in the Eastern Cape also reflected some improvement as did the trend cycle in the real value of new buildings completed in the Metro despite the actual data for August falling sharply. The trend cycles in the real value of both exports and imports recovered slightly in August reflecting some marginal improvement after a number of months of slow decline.
On the downside, the trend in the rand US dollar exchange rate weakened sharply through September, and the trend cycle of the JSE all share index continued deteriorating. The trend in the level of consumer confidence in the Eastern Cape is declining, and trend in the local rate of inflation is accelerating weighing on the index. The underlying trend in the real value of building plans passed in the Metro continues declining at a slowly accelerating rate, and the trend in passengers arriving at the PE airport declined marginally through the month. The trend in the real value of manufacturing sales in the country is also declining at a slowly accelerating pace.
The trend cycle in the prime interest rate moved sideways through August having no meaningful effect on the overall index.
Alan Straton
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