Sarb economic indicator ticks up

Johannesburg - South Africa's seasonally adjusted leading economic indicator continued to rise in October, gaining 3.74% month-on-month (m/m) and 5.62% year-on-year.

Apart from an aberration in July, when it slipped from 108.5 to 108.0, the indicator has been rising every month since March.

The South African Reserve Bank's (Sarb's) leading indicator for October was reported at 116.6 from 112.4 in September. The figure for October reflects a 5.62% increase from 110.4% recorded for the same month a year ago.

This index provides a barometer of economic growth for at least six months ahead.

The leading indicator was over 120 and closer to 130 for the whole of 2007 when the country enjoyed its best run since the Second World War.

The coincident indicator for September was reported at 134.3 from 134.1.

The lagging indicator was reported at 118.1 from 121.0.

The coincident indicator is an economic factor that varies directly and simultaneously with the business cycle, thus indicating the current state of the economy. The lagging indicator changes after the economy has already begun to follow a particular trend.

The Sarb uses over 200 economic time series to determine the turning points of the South African business cycle. Using these indicators, the leading, coincident and lagging composite business cycle indices are produced that indicate the direction of the change in economic activity rather than the level of economic activity.

- I-Net Bridge