ECONOMY
Reserve Bank says economy buoyant
Posted Mon, 12 Dec 2005
The SA Reserve Bank on Friday painted a picture of a buoyant South African economy, with citizens better off financially and spending briskly.
By the third quarter of the year, the economy had expanded uninterruptedly for 24 successive quarters, says the bank's quarterly bulletin released in Pretoria.
Gross domestic product growth was measured at five percent for the first three quarters of the year, up from last year's 4.5 percent — which figure was expected to be matched for 2005 overall.
Growth in expenditure by households moderated slightly in the third quarter, but still registered a "buoyant annualised rate of increase of six percent", the bulletin states.
Household indebtedness rose to a record-high level as spending on houses, cars and other consumer goods continued rising, albeit at a slower pace.
Spending on durable goods slowed from 21 percent in the second quarter to a "still brisk" eight percent, while that on semi-durable
goods rose from 13.5 percent to 19.5 percent.
Household debt as a ratio of annualised disposable income rose from 61 percent in the second quarter to 63.5 percent in the third.
"The rise in the ratio of household debt service payments to disposable income was very small and, at approximately 6.75 percent in the third quarter, this ratio was still only half of its record high level recorded in 1998."
The bulletin reflects on growing job numbers, and says wage increases continued to exceed inflation, "signifying higher standards of living of those in gainful employment".
The rate of increase in compensation of employees, measured over four quarters, amounted to nine percent in the second and third quarters.
Consumer inflation picked up, largely due to rising international crude oil prices, but remained within the target range of three to six percent for 26 successive months.
Producer inflation also accelerated but remained muted.
"Nevertheless, factors such as higher transport costs, an increase in the cost of plastic packaging materials and higher maize prices are likely to increasingly make themselves felt in food price inflation in particular."
The bank said the tempo of house price increases moderated in the past year, but continued to exceed consumer price inflation by "a substantial margin".
"In response to these price signals, a strong pace of residential property development and construction was maintained."
The construction of new shopping malls boosted gross fixed capital formation by the private sector.
Bank loans and advances continued to reflect the strength of the economy, the stability of interest rates and generally favourable lending and borrowing conditions, the bulletin says.
"Mortgage advances to the household sector remained the mainstay of bank credit extension over the past year, in alignment with the upward trend in real estate prices and
building activity."
Gross saving as a percentage of gross domestic product edged down from 13.5 percent in the second quarter to 13 percent in the third. For households, this figure was two percent.
The bulletin says real value added by the agricultural sector rose by ten percent in the third quarter, up from three percent in the second.
Growth in the manufacturing sector, however, slowed from eight percent in the second quarter to 5.5 in the third.
"Solid increases" were recorded in production numbers for motor vehicle and transport equipment, petroleum and petroleum products, and food and beverages.
Value added by the electricity, gas and water sector contracted in the third quarter, partly as a result of a mild winter, the bulletin says.
Residential building construction recorded a lower pace of increase, but non-residential building picked up.
Sustained growth was observed in civil construction, as roads were surfaced
or improved and dams constructed.
Growth in real output by the trade sector slowed slightly from seven percent to 6.5 percent over the two quarters, while real value added by general government rose by one percent in the second and third quarters.
Sings of employment prospects in the third quarter were "generally positive", the document states.
The volume of job advertisements in the print media rose, and business confidence remained "at exceptionally high levels".
However, man-days lost to strikes more than doubled from 1.05 million in the first three quarters of last year to 2.2 million in the same period this year.
Sapa
| 
