- March’s 2018 leading indicator reading completes the quarter, and came out at 107.4, meaning the first quarter came out at 107.5 – well up on Q4.17 and also on a year ago, indicating that from six months (Q4.18) the business cycle should strengthen (and so GDP growth).
- Q2.17 however, showed a suppressed leading indicator reading, indicating a potential dip in the business cycle (and GDP) in Q1.18; Q1.18’s industrial production and retail data confirm this risk.
- It is key to note that depressed confidence levels in 2017 would have contributed to a weak quarter in Q1.18 due to suppressed confidence and so investment levels and hiring in that period.
- Returning to Q1.18’s leading indicator reading, which rose by close to 6% on the quarter, annualised, a significant jump, sees the lift tie in with the large leaps in confidence shown by the BER’s consumer and business confidence readings on the substantial reduction in political uncertainty.
- Four of the SARB’s nine available leading indicator sub-components rose – job advertisements, BER volume of orders in manufacturing, the composite leading indicator business cycle indicator for SA’s major trading partners and the number of new passenger vehicles sold.
- Looking forward, SA is expected to see economic growth rise in the last three quarters of 2018. However, it is key that for the lift in confidence measures that occurred in Q1.18 to be sustained the uncertainties remaining such as the methodology for expropriation without compensation are resolved, in order to maintain the rise in the leading indicator and so in the business cycle indicated for later this year.