The Economy Losing the lead
The Composite Leading Business Cycle Indicator – the Leading Indicator – shows the direction in which real economic activity is moving, in real time. It is calculated on the basis of a number of areas of activity, including building plans approved, new passenger vehicles sold, commodity price index for main export commodities, index of prices of all classes of shares traded on the JSE, job advertisements, volume of orders in manufacturing, average hours worked per factory worker in manufacturing, interest rate spread, the business confidence index, gross operating surplus as a percentage of GDP. Well, the indicator for September was out this week, and it declined 0.6% month-on-month, its worst performance since June, following a 0.1% drop in August. Dragging it down were a decrease in the number of residential building plans approved and a deceleration in the 12-month percentage change in job advertisement space, while keeping it afloat was an increase in the volume of orders in manufacturing and the US dollar-based South African export commodity price index.
Comment: And with GDP growth predicted to come in at 0.6% for the year, down from the 1% we were looking for, it seems our bumpy ride will continue.