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Johannesburg - Growth in credit demand by South Africa’s
private sector braked more than expected to 7.33% year-on-year (y/y) in April
compared with a 9.16% rise in March, central bank data showed on Wednesday.
Growth in the M3 measure of money supply, also slowed to
6.16% on a year-on-year basis from 6.65% in March.
Economists in a Reuters poll had expected credit extension
to the private sector to ease only slightly to 9.07% while money supply was
seen quickening to 7.49%.
Jeffrey Schultz, a macro strategist at Absa Capital, said:
“It’s lower than what ourselves and consensus were looking for and just at a
first glance I think the main reasons for the sharp moderation were as a result
of slowing corporate credit growth.
“Household credit extension actually picked up in the
month... and a lot of that growth that we’re seeing continues to come from your
smaller components of credit like instalment sales and other loans and
advances which would include your unsecured components of credit.
“Certainly from what we saw in yesterday’s GDP (gross domestic product) growth
figures there are certain facets of the economy in the production led sectors
that are still strugglling and with that gross domestic fixed investment in the
private sector is probably also going to struggl to grow significantly this
year, and with that corporate credit growth is probably likely to be relatively
constrained over the medium term.
The rand was little changed at R8.3440 against the dollar at
06:22 GMT from R8.3410 before the data was released at 06:00 GMT. The yield on
the 2015 bond dipped to 6.395% from 6.4% while that for the 14-year bond was at
8.35% from 8.36%.
Credit demand growth has been in positive territory since
May 2010, although its recovery has been somewhat constrained by high
unemployment and an uncertain outlook for companies.
The ratio of household debt to disposable income remains
high and a jobless rate of 25.2% continues to be of concern.
Interest rates are at 30-year lows, with the Reserve Bank keeping its benchmark repurchase rate steady at 5.5% after 650 basis points of reductions in the two years to end-2010.
