Record monthly sales in new vehicles, a continued recovery of the manufacturing sector and brisk growth in credit demand indicate that the South African economy is on a roll.
On Thursday the National Association of Automobile Manufacturers of South Africa reported that new vehicle sales for the year to August rose 18,8%. A total of 41 150 units were sold, a record for August.
Total sales since the beginning of the year stood at 286 397, about 45 000 units more than the first eight months of last year.
On Tuesday Statistics South Africa reported that gross domestic product (GDP) for the second quarter grew at 3,9%. Leading contributors were manufacturing, financial services, and transport and communications.
Manufacturing has made a remarkable recovery. In the quarter to December last year, when the sector was taking pain from the rand, it made a negative contribution to GDP. In the second quarter, it grew 5,3 % and contributed a quarter of the 3,9% growth.
The internal trade sector, which includes the retail trade, continued its strong performance, growing 4,2% on the quarter.
Further evidence of manufacturing growth came on Wednesday, when the Investec Purchasing Manufacturing Index (PMI) remained at 59 points, its highest level this year. Even more encouraging was the PMI’s employment sub-index, which measures employment growth at factories. This grew by two points to 53,5, and has maintained the positive trend it started in February. The suggestion is that the sector is experiencing job growth, or is at least no longer shedding jobs.
Also on Tuesday, Reserve Bank figures showed a healthy but manageable growth in demand for credit. The broadly defined M3 Money Supply for July grew at 11,28%, slightly down from June’s 11,84%.
Private sector credit extension, which measures credit granted to the non-banking private sector and households, grew at 6,15%, up from 5,86% in June.
The Nedbank economics unit noted that “lower interest rates, benign inflation and reasonable personal income growth” would continue to drive growth in credit demand.
Finally, on Tuesday the Reserve Bank reported that the trade deficit for July stood at R470-million, down from R2,3-billion in June.