BETI reveals economy struggling to get going as strikes take their toll
South Africa’s economy is once again in decline, following the protracted strike in the motor industry, according to the October results of the BankservAfrica Economic Transaction Index (BETI).
All eyes are now on November’s economic data to see whether the economy will indeed recover from the strikes (as it did last year), or whether South Africa is hoping in vain for a significant growth spurt that will encourage noteworthy job creation.
According to Mike Schüssler, chief economist at economists.co.za, hope rests on the fact that the year-on-year figures remained positive at 2% ? a much lower figure than before. Both the monthly and quarterly BETI showed an actual decline of 1.3% and 1.5% respectively.
"The overall trend in the BETI over the last few months seems to indicate that economic growth is slowing rather than increasing. This is disappointing and could indicate that the 3% growth expected for next year may be a pipedream if no improvement occurs in the last two months of the year.”
Economic déjà vu
After the strike season of 2012, the BETI still showed a decline for a further month or so as economic transactions lagged after major industrial action. Schüssler says the current slowdown pattern seems to be a repeat of this.
"This certainly feels like a case of déjà vu, since the same ebbing and flowing is seemingly occurring this year.
"The BETI clearly indicates that economic activity takes a month or so to get back into full swing following labour issues. It is also a reminder that the lack of production in a major sector of the economy can have knock-on effects in the overall economy,” Schüssler explains.
All not doom and gloom
Meanwhile, recent disposable salaries (as indicated in the BankservAfrica Disposable Salary Index) may still be increasing above the rate of inflation.
However, the available data indicates that much of the slowdown is in the production element of the economy, while consumption continues. Therefore, imports are at a higher level than exports.
The effect of slower export earning in both September and August – with a combined trade deficit of R37 billion or 1% of GDP – has hampered overall economic transactions within the country during October and after inflation.
However, like November last year (when the BETI rose with 0.6% following poor figures in October), one can expect the BETI to show an improvement this month as well.
"We, therefore, feel that it may be a bit early to make any judgement calls on the fourth quarter, since it is possible that the November data may prove to be far more positive than that of a dismal October, as was the case in November 2012,” says Schüssler.
He explains the overall picture is still one of an economy struggling to get going.
"International trade flows remain negative, while the PMI remains flat and the increase in new motor sales is slowing. The actual level of the BETI is the same as that of February 2013 and indicates the non-performance of the South African economy (excluding the period of April to June).
"South Africa cannot afford to grow at 2% if it wants to deliver sustainable job growth and meet its own objectives as set out in the NDP or the NGP. Is this again a case of self-inflicted wounds in the August and September strike season of 2013?”
The short summary of nominal transaction values
The nominal standardised BETI (i.e. adjusted for the number of working days) was R621.7 billion – the lowest total transaction amount in three months.
The non-standardised amount was R652 billion, indicating that the high number of working days did have a relatively positive effect. However, it is definitely clear that after inflation and seasonal adjustments, a much weaker picture appears.
