Economy is recovering slowly - index

Johannesburg - South Africa's economy is recovering, albeit at a slow pace, according to the BankservAfrica Economic Transaction Index (BETI) released on Wednesday.

"The first positive... BETI in six months shows that the South African economy recovered in October," BankservAfrica said in a statement.

"Despite the low 0.2% reading, it is the best number in seven months, and the monthly change which increased by 0.6% on September makes for quite positive reading."

It said "stronger and more robust economic trends" were still being felt but quarterly numbers were still negative mainly due to a very weak August.

"The actual BETI number was 121.1, which was the highest in three months, further reinforcing the recovery trend. Although this recovery is becoming entrenched, the speed is still debatable."

It said once the next set of numbers came in it was very likely that the quarter-on-quarter changes would be positive. However, there could be further problems with power constraints.

"What is, however, still a problem is that strikes, such as the post office strike, are still impacting negatively on economic performance," it said.

"Many postal cheques have probably been delayed and this is reflected in the fact that the number of cheque transactions declined by over 30% for the first time since April, when there was also a partial post office strike."

It said cheque transactions were generally in decline as banking was becoming more electronic in nature.

However, a 30% decline year-on-year had only happened on three previous occasions, twice during post office strikes, and once when the rules for cheques changed.

"The average decline of 26.2% over the last 12 months is also very high. Although not all of this would be due to the post office strike, some of it certainly will be."

The standardised BETI indicated that nominal transactions reached R675bn for the month.

BankservAfrica said the economy was getting back on its feet, but was "not yet walking".

"With both September and October breaking the downward trend, it should be safe to assume that the South African economy is showing some bounce-back. Hopefully the current power constraints do not again change the recovery trend," it said.

"Still, the BETI shows that the South African economy is not completely out of the woods. We now expect growth closer to the 2% to 2.5% range in the fourth quarter for South Africa.

"However, one must also take the effect of the power situation into account. We will not have a clear picture of this until the November data is available."