Declining economic transactions in August offer little hope of a 3% growth recurring in the third quarter.

This is according to BankservAfrica’s monthly economic transactions index (BETI) which fell even after July’s figures were revised slightly upwards following the lower than expected inflation and producer prices.

“The quarterly and monthly BETI numbers both declined by 0,9% in August,” says Shergeran Naidoo, head of stakeholder engagements at BankservAfrica. “However, August’s lower figures were most evident in the 0,7% annual rate of change – a major difference from the 2,7% increase in July.

“Although this is also due to a very strong August 2018, which created a slight base effect impact, the change is still substantial.”

Meanwhile, the number of transactions decreased by 0,4% year-on-year in August 2019 and totalled 104 325 966, according to Naidoo. The average transaction value was R8 647. The nominal value of the transactions increased by 4.3% year-on-year. The real transaction value was very flat as the expected rate of inflation was 4,2%.

“The August BETI comes as South Africa’s GDP figures for the second quarter of 2019 turned positive, which the BETI predicted it would,” says Mike Schussler, chief economist at economistscoza. “However, the data strongly suggests third quarter growth will be softer.

“The August BETI and slow July and June show that the second quarter was more of a ‘bounce’.”

The BETI, which has been showing a fragile economy over the last five years, now shows a very stagnant economy.

“The economic transaction trend does not reveal a recession but rather a flat or declining economy,” says Schussler. “One must remember that we have one more month for the third quarter data, and that leads and lags can influence the relationship between the BETI and GDP growth.”

However, the current data for the quarter gives less optimism for another quarter of a 3% GDP increase. Taken together with new vehicle sales and the Absa Purchasing Managers’ Index, as well as subdued inflation and declining interest rates, all indications point to an economy that is not yet in a recovery mode.

“There seems to be growth for one or two quarters and then a fall back into a decline for a quarter,” Schussler says. “The economy’s potential has been underperforming for a very long time with the downswing lasting for 68 months now.”