South Africa: BETI still treading water but positive economic trend continues

Following the notable 4.7% increase from October 2023, the BankservAfrica Economic Transactions Index (BETI) remained largely unchanged in November as it continued the sideways trend observed since May 2024.

BankservAfrica Economic Transactions Index’s latest data reveals economic activity continues to move sideway, however, rising optimism levels remain

The BETI measures the value of all electronic transactions cleared through BankservAfrica at seasonally adjusted real prices.

“The BETI moderated slightly in November to an index level of 136.2, 0.4% down from the revised level of 136.8 in October,” says Shergeran Naidoo, BankservAfrica’s head of stakeholder engagements.

At this level, the BETI remains up by 4.4% compared to last year.

Treading water

While the underlying momentum in the economy continues to build, the BETI has essentially been treading water since May 2024 but has remained at an elevated level compared to recent history.

“While several structural reforms are in the pipeline, coinciding with a cyclical upswing unfolding, it will take time to reflect in improved economic activity from current levels,” says Elize Kruger, an independent economist.

The much-anticipated cyclical upswing will be driven by moderating consumer price inflation, lower interest rates, and real increases in salaries and wages.

Improved confidence levels will add to the upward momentum.

3 year high in retail sector

Business confidence in the retail sector reached a three-year high in Q4 2024, climbing nine percentage points to 54%, according to the Bureau for Economic Research (BER).

This marks a continuation of the positive trend observed over the past two quarters, driven by strong performance in several retail categories.

The BER says retailers of non-durable goods, including food, beverages, groceries, cosmetics, and pharmaceuticals reflected the highest growth in sales volumes.

Semi-durable goods retailers specialising in clothing, textiles, and footwear were the most optimistic group in Q4, with confidence levels soaring to the highest level since Q3 2007, buoyed by substantial improvements in sales volumes and profitability.

Two-pot retirement withdrawals an additional tailwind

An additional tailwind is the potential that some of the two-pot retirement withdrawals will surface in retail spending.

The latest from the South African Revenue Service, dated 19 November, indicated that over 1.9 million individuals had applied for about R35bn worth of withdrawals.

“These factors would have contributed to the brisk retail spending during November and Black Friday and will likely carry over into the festive spending season in December,” says Kruger.

Cyclical economic recovery

Other economic indicators confirm the unfolding cyclical economic recovery.

The S&P Global South Africa Purchasing Managers’ Index (PMI) was above the 50 ‘no-change’ mark for the fourth consecutive month in November, signalling a solid improvement in private sector performance.

Despite registering a fraction below the 13-month high of 51.0 in September, it still suggests that the private sector remained in growth mode in Q4, with business activity levels rising from the higher sales and more favourable economic conditions.

Also worth noting, South African firms increased their employment levels for the first time in six months.

Strong performance in vehicle sales

Naamsa revealed a strong performance in November, with new vehicle sales emerging as the best in 20 months – increasing by 8.1% year-on-year.

New passenger car sales powered ahead with growth of 20% year-on-year - recording the best month since October 2019 – and registering higher than the 14.5% in October.

Absa Purchasing Managers’ Index slips

However, the seasonally adjusted Absa Purchasing Managers’ Index slipped to 48.1 in November 2024, suggesting near-term pressure in the manufacturing sector.

According to the BER, ‘this points to some loss of momentum in the recovery seen over the past two months however, the PMI has been volatile this year, so this is not unexpected.’

Transactions cleared moderated

Following an all-time high in October, the number of transactions cleared through BankservAfrica in November moderated to 166.3 million, down from 167.8 million in October but still 5% up on a year ago, according to Naidoo.

The monthly increase was driven by PayShap* with transaction volumes up by 14.7%, following October’s increase of 21.7%.

The standardised nominal value of transactions also increased to R1,358tr in November 2024 compared to R1,317tr in October, representing an increase of 3.2%.

“The first three quarters’ economic growth of only 0.4% is indeed disappointing, but optimism for improved growth in 2025 and into the medium term, remains the base case expectation,” ends Kruger.