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Sarb indicator spurs hopes for economy

Johannesburg - South Africa's composite leading business economic indicator increased 1.3% year on year (y/y) in October from a revised 0.8% (0.3%) in September, data released on Tuesday by the South African reserve Bank showed.

On a month to month basis, it was up 0.3%.

The country's seasonally adjusted leading economic indicator provides a guideline for economic growth for at least six months ahead.

The latest reading takes the indicator to an index level of 131.4, compared with a revised figure of 130.9 (130.5) figure in September.

The Reserve Bank said seven of the 11 component time series that were available for October 2011 increased, while four decreased. The major positive contributors to the movement in the leading indicator in October were the 12-month percentage change in job advertisement space and the BER's average hours worked in the manufacturing sector. The largest negative contribution came from the twelve-month percentage change in the export commodity price index, followed by the number of residential building plans passed.

The composite coincident business cycle indicator increased by 0.9% in September 2011 compared with the preceding month. The composite lagging business cycle indicator increased by 1.8% in September 2011 compared with the preceding month.

The Reserve Bank uses more than 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, indicating the direction of the change in economic activity rather than the level of economic activity.

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