Credit growth disappoints

Johannesburg - Credit extension to the private sector (PSCE) grew at a rate of 2.34% year-on-year (y/y) in August from a revised 3.31% (3.40%) in July, the South African Reserve Bank (SARB) said on Wednesday.

The rate of growth of South Africa's broad M3 money supply measure rose by 5.49% in the year to end-August from a revised 5.70% (5.78%) in the year to end-July.

The rate of growth in South African credit extension to the private sector (PSCE) was expected to have increased at 2.70% year-on-year (y/y) in August, according to a survey by I-Net Bridge.

"This number is much weaker than either we, or the market, expected and it takes us back to when the records began in 1968," said Carmen Altenkirch, an economomist at Nedbank. "Indicative of how weak the figures are is that credit was roaring ahead at 18.8% last year. We expect one more rate cut this cycle."

South Africa's broad M3 money supply aggregate growth rate, meanwhile, was expected to have increased in July at 5.80% y/y.

Forecasts among the economists surveyed for PSCE ranged from 2.1% to 2.9%, while the range of forecasts for M3 was from 4.9% to 6.8% at the top of the range.

- I-Net Bridge