Sign in
Research link-chevron Created with Sketch.
link-chevron Created with Sketch. Products and Services link-chevron Created with Sketch.
link-chevron Created with Sketch. Products and Services
Economics link-chevron Created with Sketch.
FX Report
The Loop
Inside China
Insights & Strategy
Equities link-chevron Created with Sketch.
Corporate Commissioned Research
Analysts
Analysts
Help and Support
Help and Support
Corporate and Investment Bank
Standard Bank Group
The SA Daily 28 July 2020

June PSCE likely up a bit

Shireen Darmalingam

  • The SARB private sector credit extension (PSCE) tomorrow is forecast by Bloomberg consensus at 6.5% y/y, after 6.35% y/y in May (from 7.18% y/y in April). PSCE y/y growth was supported by higher financial investments and bills discounted in May.
  • Credit extended to both households and corporates however remained weak in May. Growth in credit extended to households moderated to 3.6% y/y, from 4.5% y/y in April, while growth in credit to corporates slipped to 8.4% y/y, from 9.3% y/y. The long-term average for credit extended to households is around 5.2%. Credit growth to consumers has averaged 5.2% in the first five months of 2020, from 6.2% same time last year.
  • Credit growth is nevertheless being somewhat supported by record low interest rates. Since January, the SARB has cut the repo rate by 300 bps — but the pandemic and loss of income imply restrained spending by all.
  • The weak labour market and job uncertainty in 2020 will keep household spending subdued this year. The unemployment rate increased to 30.1% in Q1:20; it may have risen further in Q2:20 on lockdown restrictions and job layoffs in that quarter.
  • Household consumption expenditure (HCE) will no doubt be adversely impacted by rising unemployment; HCE will likely contract by 10.5% in 2020 then recover to 6.5% in 2021.

Read PDF