SA's leading business cycle indicator, released by the Reserve Bank for September, recorded a m/m increase of 1,9% to 114,6. This is the sixth successive monthly rise, which pushed the annual rate of change to 0,3%, compared with -3,5% in August.
Stanlib economist Kevin Lings says it is the first time since the middle of 2007 that the indicator has been positive on a y/y basis. The improvements in the indicator suggest that the SA economy should recover more fully in 2010. SA's indicator has tended to lag the global economic cycle, into a recession as well as into a recovery, by about one quarter. Lings says the relationship between SA's indicator and the leading indicator for the OECD appears to have strengthened recently, largely because of globalisation and SA's integration into the global economy.
The lag between the two has shortened from around two quarters a decade ago to one quarter at present. The OECD's indicator has moved convincingly higher in the past six months, which is encouraging for SA. A global recovery is positive for SA exports, tourism and investment.
The indicator consists of 13 sub-indices, including manufacturing and trade volumes.
Razina Munshi
51 points. SACCI's trade conditions survey slipped two points in October, from 53 previously. The index is expected to remain positive (above 50) even though sales and new orders of sub components slowed slightly.
20,3 percent y/y. The number of corporations filing for liquidation in the 10 months to October grew by 20,3% compared with -1,4% last year. This is an improvement compared with the past few months when the figure was 30% y/y.
-5,1 percent y/y. Retail sales improved slightly in September, from a 6,5% drop in August. Consumer spending is still weak, a reflection of job losses and high debt levels. The rate of decline is expected to moderate ahead of the festive season.
At the start of this week, the gold price soared to another record as a weaker dollar and increased concern over inflation boosted demand for the metal as an alternative asset and inflation hedge. The US dollar fell against a basket of currencies after a US Federal Reserve official indicated that US interest rates would remain low for an extended period. Gold holdings in the SPDR Gold Trust rose and the spot price jumped to a record US$1 174/oz during intra day trade on Monday, bringing this year's gains to more than 30%.
The price of Brent crude has fluctuated around the US$77/bbl level as it continues to take direction from movements in the dollar. And better than expected home sales data out of the US, as well as positive economic news out of Europe, increased expectations of a synchronised global recovery. This would boost demand for oil, potentially pushing the price up further. However, an industry report expected out of the US later this week may show rising crude oil stockpiles capped any significant rally in prices.
The RMB base metals index, which includes all six industrial metals on the London Metals Exchange, jumped 3% last week as a weaker dollar made dollar-denominated commodities cheaper for holders of other currencies. The major contributors were sharp increases in copper and aluminum prices during the week. Industrial metals have rallied considerably this year.
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