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The SA Reserve Bank’s composite leading business cycle indicator, which has been negative since November 2013, fell for the 27th consecutive month in January, according to this week’s release.
A leading indicator signals future events.
The Reserve Bank’s leading indicator fell 0.6% month on month in January 2016 and was down 4% year on year.
Investment research company NKC African Economics warned: “South Africa’s economy is struggling for traction and although the baseline scenario is for positive growth this year, albeit fractionally so, another external shock may be enough to dump the country into recession.
“Six of the 10 component time series that were available for January 2016 decreased, while one remained unchanged and three increased.
The largest negative contributions in January came from a decrease in the number of residential building plans passed, as well as a decrease in the US dollar-based export commodity price index,” said the central bank.
“The largest positive contribution to the movement in the composite leading indicator in January resulted from an acceleration in the six-month smoothed growth rate in real money supply, followed by an acceleration in the 12-month percentage change in the number of new passenger vehicles sold,” the bank added.
The bank’s composite coincident business cycle indicator remained unchanged month on month in December.
A coincident indicator moves in step with the majority of the economy.
A lagging indicator follows an event.
The bank’s composite lagging business cycle indicator decreased 1.4% month on month in December.
