Resilient economy leads to a slight improvement for the BETI in April

Johannesburg - After two consecutive months of declines, the BankservAfrica Economic Transactions Index (BETI) increased in April 2023. Although encouraging, it is unlikely that this is the start of a notable recovery phase in the economy as the index deteriorated on an annual and quarterly basis. 

“The BETI reached an index level of 132.6 in April 2023, almost on par with the level of 132.9 tracked in January 2023,” says Shergeran Naidoo, BankservAfrica’s Head of Stakeholder Engagements. “However, on an annual basis, the BETI declined by 3.5%.” 

The slight improvement in the BETI occurred against a fairly grim economic context in April of load shedding continuing unabatedly, interest rates and inflation remaining at elevated levels, and the global economic slowdown still prevalent. Therefore, the slight improvement signals the South African economy’s resilience, despite the ongoing challenges. 

“In the past nine months, the BETI has moved mostly sideways with some volatility from month to month and confirms that the economy remains in a ‘muddle-along-little-thriving’ narrative, which is also evident in other nowcast indicators,” comments independent economist, Elize Kruger. 

After having moved sideways in December 2022 (53.1) and January 2023 (53.0), the Absa Purchasing Managers’ Index (PMI) plummeted to 48.8 index points in February, and further to only 48.1 in March, before recovering to 49.8 in April. April was the third straight month that the index pointed to a deterioration in business conditions in the manufacturing sector. The S&P Global South Africa PMI also signalled dismal economic activity in the private sector, dropping from 50.5 in February to 49.7 in March and further to 49.6 in April, remaining below the 50.0 neutral mark.

According to the report, business activity at South African firms continued to contract at the start of the second quarter, as a slight lift in demand was more than offset by capacity constraints from load shedding and supply shortages. The resilient vehicle market has also faltered since March. The motor industry sold 37 107 cars and commercial vehicles in April — 0.2% fewer than in the corresponding month of 2022. Passenger car sales took the biggest knock, dropping 6.0% y/y from 31 631 to 24 174 in April 2023.  

On the global front, April saw a further marginal increase in global manufacturing production, as improved supply-chain conditions and the clearance of existing backlogs offset weaker demand. The J.P.Morgan Global Manufacturing PMI™, however, remained unchanged at 49.6 in April, the eighth successive month below the neutral 50.0 mark, signalling ongoing strain in the global manufacturing sector. However, the broader J.P.Morgan Global Composite Output Index rose to 54.2 in April, up from 53.4 in March, signalling expansion in each of the past three months. Clearly, this is not a synchronised global recovery across all sectors, though pockets of growth are evident.

The standardised nominal value of transactions cleared through BankservAfrica in April 2023 was R1.22 trillion compared to March’s R1.19 trillion, while the number of transactions moderated from an all-time high of 149 million to 135.9 million in April 2023, says Naidoo. This is partially a result of the many public holidays in April. The average value of transactions covered by the BETI has declined over time, especially in the last six months. In April, the average value was R7718 in April 2023, 6.4% lower than the average recorded a year earlier. This confirms the growing trend in electronic payments.

“While the BETI reflected a small increase in April, the other nowcast indicators confirm our doubts that this is the start of a notable recovery phase for the economy. South Africans should prepare themselves for ‘more of the same’ for a longer period than hoped for,” ends Kruger.