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Reserve Bank indicator signals economic growth in 2017

Cape Town – The SA Reserve Bank (Sarb) index that measures economic expectations for six months improved for the third month in a row, it announced on Tuesday.

The bank’s composite leading business cycle indicator increased by 0.8% on a month-to-month basis in October 2016. This followed a 1.1% increase in September and a 0.6% increase in August.

The boost was due to the acceleration in the six-month smoothed growth rate in the real M1 money supply, followed by the acceleration in the 12-month percentage change in the number of new passenger vehicles sold, Sarb explained in a statement.

Negatives came from a deterioration in the BER’s Business Confidence Index (BCI), as well as a deceleration in the twelve-month percentage change in job advertisement space.

The BCI fell back by four points to 38 in the fourth quarter, having improving to 42 index points in the third quarter. This implies that over 60% of respondents are unsatisfied with present business conditions.

The economy grew by only 0.2% from 2016 Q2 to 2016 Q3 on seasonally adjusted and annualised terms, Stats SA said in December.

Other indicators add to the Sarb's indicator. Ecoquant research shows that real household consumption expenditure growth in 2017 is forecast to amount to 1.7% compared with the estimated growth of 1.2% which will be recorded in 2016, Fin24 reported on Tuesday.

GRAPH: Composite leading business cycle indicator

Source: Sarb

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