South Africa’s seasonally adjusted leading economic indicator was reported by the South African Reserve Bank to have leapt to 120,7 for November 2006 from the still-high 119,5 recorded in October, and, according to an analyst, this indicates that growth is still quite spectacular.
“This is a very good number. It indicates that the so-called ‘soft patch’ is not going to be long-lived. It shows growth is still quite spectacular,” explained Brait economist Colen Garrow.
The leading indicator leads gross domestic product growth by about a year and while the economy may be a little subdued now, it should “roar ahead” in the future, Garrow pointed out.
“It confirms a lot of things — keeping in mind this is the largest upward phase of the business cycle,” concluded Garrow.
The reserve bank uses over 200 economic time series to determine the turning points of the South African business cycle. Using these leading indicators, coincident and lagging-composite business-cycle indices are produced that indicate the direction of the change in economic activity rather than the level of economic activity.
The coincident indicator for October was reported at 190,6 from 187,7 in September, while the lagging indicator was reported at 110,7 in October from 109,4 in September. — I-Net Bridge