After two consecutive months of encouraging growth, the BankservAfrica Economic Transactions Index (BETI) fell in February 2023, indicating the country’s deteriorating economic activity.
The country is now seeing clouds burst following storm warnings in previous months.
“At an index level of 131, BETI for February fell to October levels and fell by 1.3% month-over-month, as opposed to the 1.4% and 0.4% increases in December 2022 and January 2023,” says Shergeran Naidoo, Head of BankservAfrica. of stakeholder involvement.
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February’s BETI was 1.9% lower than a year ago.
This marked moderation in the BETI reflects the pressure on companies in the country’s major economic sectors from the prevailing gloomy economic environment.
This includes continued tax cuts, interest rates and inflation that remain at elevated levels, and the global economic slowdown, said independent economist Elize Kruger.
Evidence of the impact and cost of the shutdown is reflected in data from Stats SA, which shows the economy contracted by 1.3% in the fourth quarter of 2022, on a seasonally adjusted quarterly basis.
Retailers also shared their predicted losses and costs arising from business as usual during the severe outage. These cost increases are likely to be passed on to the price of the final product, fueling consumer inflation or leading to lower margins.
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The other nowcast indicators showed a mixed performance in February.
After moving sideways in January 2023 and December 2022, the Absa Purchasing Managers’ Index plummeted to 48.8 index points in February, while the sub-index that measures expected business conditions in six months fell to its lowest level since May 2020.
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On the other hand, the S&P Global South Africa Purchasing Managers Index indicated that private sector economic activity stabilized in February after contracting for five consecutive months as companies reported a slight recovery in purchasing levels, although input cost inflation accelerated to a seven-month high.
The growth rate of car sales slowed further in February, but remained 2.8% higher than a year earlier.
According to the latest JP Morgan Global Manufacturing PMI, the manufacturing decline showed signs of easing globally in early 2023. The contraction in production and the number of new orders both slowed, while employment increased slightly.
Economic activity in February was also mixed, according to BankservAfrica data.
“During the month, standardized notional value of transactions stood at R1.17 trillion in February, up from R1.04 trillion in January. However, the number of transactions slowed to 133.0 million during the month compared to the 135.7 million tracked in January,” said Naidoo.
According to Kruger, the renewed moderation in the BETI, after only two months of marginal improvement, confirms that the economic environment remains challenging and that the economy remains in a “muddle-a-little-bloom” story.
“Although measures have recently been taken and projects announced in the energy and transport sectors of the economy, little delay can be expected in the short term,” she said.
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