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The SA Daily 21 May 2019

Leading index heads up

Shireen Darmalingam

  • The South African Reserve Bank’s leading indicator, which measures the direction in which the real economy is moving, for March is due out today at 09h00. It had come in at 104.9 pts in February (102.8 pts in January) on positive contributions from the number of residential building plans approved as well as the acceleration in the 12-month percentage change in the job advertisement space. The coincident indicator, which measures current economic conditions, also rose in February though the lagging indicator declined.
  • Bloomberg consensus sees the March leading index rising to 105.0 (104.9 pts in February). Note that this indicator tends to shift direction in advance of the business cycle. SA’s leading indicator has averaged 99.2pts since 2000 (90.4 pts for SA’s main trading partners despite positive y/y growth since 2012). And, the SA index has been above the 100 pts benchmark since September 2016.
  • Also, the SA leading indicator has been trending up in line with the leading indicator of our main trading partners. However, risks both here and abroad may limit upside in both indices. Specifically, the intractible US-China trade war, uncertainty around Brexit and shaky global politics will impact on the global leading indicator, with a likely detrimental impact on South Africa.

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