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Sarb leading indicator recovers

Johannesburg - SA's composite leading business economic indicator rose for the first time after eight declines on a year on year basis by 0.1 % year on year (y/y) in August‚ after a revised 1.8% (2.3%) y/y decline in July‚ data released on Tuesday by the South African Reserve Bank (Sarb) showed.

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

The Reserve Bank said the composite leading business cycle indicator also increased by 0.1% in August compared with the preceding month.

Five of the 11 component time series that were available for August increased‚ while six decreased‚ the Reserve Bank reported.

The latest reading takes the indicator to an index level of 131.2 in August‚ compared with a revised 131.0 (130.4) in July.

The largest positive contributions in August came from an acceleration in the twelve-month percentage change in the composite leading business cycle indicator of South Africa's major trading-partner countries‚ as well as an increase in the prices of all classes of shares traded on the JSE.

The major negative contributions to the movement in the leading indicator in August came from a decrease in the number of residential building plans passed‚ as well as a decline in the export commodity price index.

The composite coincident business cycle indicator decreased by 0.3% on a month-on-month (m/m) basis in July and was up 5.9% y/y‚ from a 5.7% y/y increase in June.

The composite lagging business cycle indicator decreased by 1.4% m/m in July. It was 1.1% down y/y in July from a 0.3% y/y increase in June.

The Sarb uses more than 200 economic time series to determine the turning points of the SA 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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