Transactions show SA economy flat but slowly positive – BankservAfrica index

11 February 2015 | Economy | General | BankservAfrica

With consumer price inflation slowing in January 2015 as a result of huge fuel price decreases, the lower rate of inflation has helped keep the year on year BETI positive despite a very flat monthly change. Although this is certainly not the start to the year South Africa would ideally have wanted, it is at least not a declining start.

The South African payment system sits right in the middle of the economy and therefore the BankservAfrica Economic Transaction Index (BETI) again gives us a very fast and broad picture of an economy that is just keeping its head above water.

While January data usually has less economic activity than December, this year, when seasonally adjusted, the monthly change was 0.1% down from a month ago after the effect of inflation was taken into account.

A very flat start to the year may not make for any exciting economic activity but January 2015 does start the year similar to January 2014. January 2014 was flat on the month prior as the first weeks of the platinum strike hit the economy in 2014. So at present the BETI indicates that the start of 2015 is very similar to the start of 2014 – hopefully the flat start becomes more positive as the year progresses.

This year January’s small monthly decline may be a result of power outages and perhaps also the drought that is affecting mainly the KwaZulu-Natal economy countering the effect of the big drop in fuel prices. Towards the end of the month there may also have been a holding back of fuel purchases as motorists and businesses waited to buy cheaper fuel in February. It is possible that this may have delayed some economic activity which we may now see in February.

Year on year the BETI is showing growth of 1.1% in real terms. The quarterly change on a quarter ago is also positive at 1.2%. Also, December was the strongest month in nearly two years, keeping quarterly growth above 1% for the second consecutive month in a row.

The overall growth trend in the economy remains slow but positive with some upward potential seen in the next month. Another big fall in fuel prices could help the South African economy with its high logistics cost. Against this is the massive shortage of electricity which will at least counter some of the positive effects of oil price declines. But overall the electricity outages have not caused the economy to go into a declining trend which at least shows resilience from economic role players.

With the Purchase Managers Index (PMI) very strong in January but new car sales down, the overall low positive year on year growth that the BETI indicates seems to show a very clear slow but steady growth in the overall economy. That is probably the middle ground of all the January data the economy has had so far.

But, as with any other broad data, the January data on its own is not the only factor and the fact that December was the strongest month in two years does indicate an overall better economy when both months are looked at together. Slow but positive is still the best description for the overall economic trend.

The January transaction numbers and standardised turnover values

January has 80.7 million transactions via the BankservAfrica payments system which was up 1.1% on a year ago and standardised monetary value fell below R600 billion for the first time since January last year and sits at R593.5 billion.

January is normally the month with the smallest number of transactions in the payment system every year. However, January 2015 is still 6.3% higher than January 2014 in standardised nominal terms.

The average value of transactions however only increased by 2.2% in nominal terms. This small increase shows both the decline in the inflation rate and also that South Africans are not as willing as before to buy big ticket items and hence cars sales and the like are showing a slight decline.

The BETI and SARB Co-incident Indicator