January transactional values decline again for the first time in four months

CAPE TOWN – Evidence of another slowdown in the domestic economy is coming to the fore according the BankservAfrica Economic Transaction Index (BETI) January data, which reflected weakened values and volumes.

In January, the BETI declined across all measurement periods for the fourth time in the last 24 months to a reading of 127.7 points. The year-on-year change was 1.2 percent with a quarterly decline of 0.4 percent.

January 2019 was a dismal month for the economy. The previous months combined, show a slowing trend over the last four months. Other economic indicators of domestic spending such as vehicle sales and the manufacturing PMI also showed declines.

The growth trend began slowing down in December 2018 by a 0.1 percent drop from November. This is as November represented a slightly positive month on the back of Black Friday and Cyber Monday sales. 

January’s slowdown seems to come partly from electronic debit transactions. These, estimated to be around 4.5 percent of the total economy, increased by only 1.5 percent before inflation. This indicates a real decline of around 3 percent on 2018’s figures. 

Electronic credit transactions declined by around 2 percent. Real-time interbank transactions are however in a very strong growth phase. When compared against these, it is evident that cheque payments continued declining over the last decade and is now the smallest payment method – other than authenticated early debit orders.

The concern, however, is that the overall picture indicates that the downswing phase of the business cycle enters its 61st month in January and is now nine months longer than the previous downswing phase in the South African economy. The economy is very firmly caught in a low growth environment and drastic measures will have to be taken soon to help the economy get to a higher growth rate.

What is also becoming clearer is that the domestic economy has not improved much in real terms in five years. In January 2014, the index was 124.7, which means real-term transactional growth was just more than 2.4 percent in the five-year period leading to January 2019’s reading of 127.7. 

While electronic transactions are the bulk of the South African economy, these – measured in the BETI – are a good indicator of gross domestic product (GDP) and domestic expenditure in the broadest sense as the index covers almost all key economic sectors from construction to wholesale.

The average nominal value of transactions was R8 056 in January 2019. This is R4 more than the value in January 2018 and comes as the change in transactional volumes reached 3.5 percent, the lowest since the 2 percent in September 2018. 

Meanwhile, the overall trend of transaction values declining in real terms continues.

The number of transactions increased to 95.5 million from 92.3 million year on year. January is normally a slow month for transactions but at least the volume is up, although the real value is negative if one accounts for inflation and weekdays.

Graph: The BETI and the SARB coincident indicator

image23 - January transactional values decline again for the first time in four months


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