Reserve Bank’s leading indicator drops in December

Staff Writer

THE South African economy faces a challenging first half of the year‚ according to the Reserve Bank‚ which said on Tuesday that its composite leading business economic indicator had dropped 0.8% year on year in December‚ following a 0.1% decline in November.

The seasonally adjusted provides a guideline for economic activity and growth for at least six months ahead.

The Bank said the composite leading business cycle indicator was unchanged in December compared with the preceding month. Six of the 10 component time series that were available for December decreased‚ while the remaining four increased.

The latest reading means the indicator remained unchanged at 100.2 points in December.

The major negative contributions came from a deceleration in the 12-month percentage change in the composite leading business cycle indicator of South Africa’s major trading partner countries‚ as well as a deceleration in the 12-month percentage change in job advertisement space.

The largest positive contributions in December came from an increase in the number of residential building plans passed‚ followed by an increase in the Bureau for Economic Research’s volume of domestic orders in the manufacturing sector.

The composite coincident business cycle indicator increased 0.8% month to month basis in November‚ and was up 2.4% year on year in November.

The composite lagging business cycle indicator rose 0.3% month on month in November and was up 2.6% year on year.

The Bank uses the leading‚ coincident and lagging composite business cycle indices to indicate the direction that economic activity is likely to take in the short term. © BDlive 2014