BETI echoes economic activity slowdown in February

Persisting pressures in the economy hurt businesses and consumers

After two months of optimistic development, the BankservAfrica Economic Transactions Index (BETI) decreased in February 2023, indicating that the country’s economic activity was declining.

“At an index level of 131, the BETI for February slipped to October’s level and declined by 1.3% on a monthly basis, unlike the increases of 1.4% and 0.4% experienced in December 2022 and January 2023,” says Shergeran Naidoo, BankservAfrica’s Head of Stakeholder Engagements. The February BETI was 1.9% lower than a year ago. 

According to independent economist Elize Kruger, the BETI’s notable moderation reflects the pressures that businesses in the country’s main economic sectors are feeling as a result of the current dismal economic context: continuing load shedding, interest rates and inflation remaining elevated, and the global economic slowdown. The impact and expense of power shedding can be seen in Stats SA statistics, which shows that the GDP fell by 1.3% in Q4 2022 on a quarterly seasonally adjusted basis. Retailers have also expressed their anticipated losses and expenditures as a result of continuing to operate as usual amid the heavy load shedding. These cost increases are either likely to be passed onto the end product price, fuelling consumer inflation or leading to lower margins. 

In February, the other nowcast indicators delivered varied results. After sideways movements in January 2023 and December 2022, the Absa Purchasing Managers’ Index declined to 48.8 index points in February, while the sub-index gauging projected business conditions in six months fell to its lowest level since May 2020. The S&P Global South Africa Purchasing Managers Index, on the other hand, indicated that economic activity in the private sector stabilised in February after contracting for five months in a row, as firms reported a slight recovery in purchasing levels, though input cost inflation accelerated to a seven-month high.

The pace of car sales growth slowed further in February, but it still 2.8% higher year on year. According to the most recent J.P.Morgan Global Manufacturing PMI™, the global manufacturing slowdown began to ease in early 2023. Output and new order contraction rates both slowed, but employment increased somewhat.

According to BankservAfrica data, economic activity in February was likewise mixed. “During the month, the value of standardised nominal value of transactions was R1.17 trillion in February, a growth from the R1.04 trillion in January. However, the volume of transactions slowed to 133.0 million during the month compared to the 135.7 million tracked in January,” says Naidoo.
 
“The renewed moderation in the BETI, after only two months of marginal improvement, confirms that the economic environment remains challenging and that the economy remains in a ‘muddle-along-little-thriving’ narrative. While actions were recently taken and projects have been announced in the energy and transport sectors of the economy, little reprieve can be expected in the short term,” states Kruger.