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IOL News
5 days ago
- Business
- IOL News
June BETI improvement signals economic recovery in South Africa
The index, which measures the value of electronic transactions processed through BankservAfrica on a monthly basis at seasonally adjusted real prices, increased by 0.4% in terms of monthly growth in June to an index level of 139.1, a second month of recovery. BankservAfrica is South Africa's biggest automated payments clearinghouse. Image: Simphiwe Mbokazi Independent Newspapers The BankservAfrica Economic Transactions Index (BETI) improved for a second consecutive month in June, indicating a more optimistic outlook for economic performance in the second quarter. The index, which measures the value of all electronic transactions cleared through BankservAfrica's automated clearinghouse on a monthly basis, increased in June to an index level of 139.1, representing a 0.4% monthly growth and a second month of recovery. Shergeran Naidoo, BankservAfrica Head of Stakeholder Engagements, said the improved BETI signals a positive shift in overall economic activity in the second quarter, which could also be reflected in a favourable GDP outcome set to be published by Stats SA in early September. 'The uptick in the BETI in June is welcomed, especially given that the economy started 2023 on the back foot, with quarterly growth of only 0.1% in the first quarter on a seasonally adjusted basis, and confidence indicators declining across the board,' said Independent Economist Elize Kruger. 'While several sectors entered a technical recession in the first quarter, recent indicators suggest a rebound in mining and manufacturing, with both sectors likely returning to growth in the second quarter,' said Kruger. Overall, second quarter GDP growth is forecast at 0.6% quarter-on-quarter, seasonally adjusted, compared to 0.1% in the first quarter. The upward trend is in line with the BETI indications for the second quarter. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Kruger said even though some sectors had remained resilient, others were still struggling amid ongoing challenges and notable risks. 'The renewed uncertainty about the impact of US import tariffs, not only in South Africa but across the globe, does not bode well for confidence and investments, and will increase the downside risk to growth forecasts in 2023 and beyond,' she said. Looking ahead, she said that although South African exports were expected to come under pressure from higher US import tariffs, the elevated gold price and lower international oil prices could soften some of the impact. 'Furthermore, a considerable share of South African export commodities has been exempted from the announced US import tariffs, which could provide a buffer for the mining industry and subsequently provide some support for the economy,' she said .The BETI's recovery is also reflected in other economic indicators. National Association of Automobile Manufacturers of South Africa data revealed that total vehicle sales improved by 18.7% year-on-year in June, with year-to-date sales up 13.6% compared to a year earlier, while new car sales in June grew by a notable 21.7% y/y and year-to-date were 21.3% ahead. The S&P Global South Africa Purchasing Managers' Index has also remained in expansionary territory with an index level of 50.1, although it was down from 50.8 in May. On the other hand, the Absa Purchasing Managers' Index, reflecting on prospects in the manufacturing sector, remained in contractionary territory for an 8th consecutive month at 48.5 index points, but up from 43.1 index points in May. After reaching an all-time high of 176.3 million in May 2023, the number of transactions cleared through BankservAfrica moderated somewhat in June to reach 167.3 million, but it was still 13.5% up on a year ago, said Naidoo. A tailwind that should continue to buffer the economy against global headwinds includes headline inflation that remains below the South African Reserve Bank's 3-6% target band at 2.8%, according to May's print. The average 2023 forecast is expected to be around 3.5%. The favourable inflation environment has created scope for further interest rate cuts. Visit:
The Citizen
5 days ago
- Business
- The Citizen
Does stronger economic activity indicate improved GDP?
GDP growth for the second quarter is forecast at 0.6% compared to 0.1% the first quarter, in line with the BETI indications for the quarter. Stronger economic activity, as demonstrated by the increased number of electronic transactions in South Africa in June, can indicate an uptick in GDP for the second quarter after a disappointing first quarter. According to the BankservAfrica Economic Transactions Index (BETI), that measures the value of all electronic transactions cleared through BankservAfrica on a monthly basis at seasonally adjusted real prices, the BETI improved for the second consecutive month in June, indicating a more optimistic outlook for economic performance in the second quarter. 'The BETI increased in June to an index level of 139.1, representing growth of 0.4% in June and a second month of recovery,' Shergeran Naidoo, head of stakeholder engagements at BankservAfrica, says. 'After months of choppiness, the improved BETI signals a positive shift in overall economic activity in the second quarter, which could also be reflected in a favourable gross domestic product (GDP) outcome when Statistics SA publishes it in early September. ALSO READ: Economic activity picked up for the first time in 8 months in May Welcome uptick in economic activity Elize Kruger, an independent economist, says the uptick in the BETI is welcome, especially given that the economy started 2025 on the backfoot, with quarterly growth of only 0.1% in the first quarter and confidence indicators declining across the board. 'While several sectors entered a technical recession in the first quarter, recent indicators suggest a rebound in mining and manufacturing, with both sectors likely returning to growth in the second quarter. 'While some sectors remained resilient, others are still struggling amid ongoing challenges and notable risks. The renewed uncertainty about the impact of US import tariffs, not only in South Africa but across the globe, does not bode well for confidence and investments and will increase the downside risk to growth forecasts in 2025 and beyond.' ALSO READ: Structural reform is silver bullet needed for SA economy to grow Although South African exports are expected to come under pressure from higher US import tariffs, the elevated gold price and significantly lower international oil prices could soften some of the impact, Kruger says. 'Furthermore, a considerable share of South African export commodities has been exempted from the announced US import tariffs, which could provide a buffer for the mining industry and subsequently provide some support for the economy.' Other economic data also shows continued recovery The BETI's continued recovery is also reflected in other timeous economic indicators. naamsa data revealed that total vehicle sales improved by 18.7% in June, with year-to-date sales up by 13.6% compared to a year earlier, while new car sales in June grew by a notable 21.7% y/y and year-to-date were a notable 21.3% ahead. The S&P Global South Africa Purchasing Managers' Index (PMI) remained in expansionary territory with an index level of 50.1, though down from 50.8 in May. Although the report noted 'mixed signals' from the underlying components, the average quarterly reading was higher than in the first quarter. On the other hand, Kruger says, the seasonally adjusted Absa Purchasing Managers' Index (PMI), reflecting on prospects in the manufacturing sector, remained in contractionary territory for an eighth consecutive month at 48.5 index points, but up from 43.1 index points in May. After reaching an all-time high of 176.3 million in May 2025, the number of transactions cleared through BankservAfrica moderated somewhat in June to reach 167.3 million, still 13.5% up on a year ago, Naidoo says. ALSO READ: Economic activity slows in April as economy struggles Value of economic transactions also increase The standardised nominal value of transactions also increased to R1.361 trillion in June compared to R1.351 trillion in May 2025, with the resultant average value per transaction covered in the BETI increasing to R7 747, compared to May's R7 618, showing a 1.7% monthly increase. Kruger says locally some structural tailwinds should also continue to buffer the economy against global headwinds. Headline inflation remains below the South African Reserve Bank (Sarb) 3-6% target band at 2.8%, according to May's print. 'The average 2025 forecast is expected to be around 3.5%. The favourable inflation environment created ample scope for the Sarb to cut interest rates. 'Carpe Diem Research Services forecasts a 25 basis points cut to be announced at the upcoming Monetary Policy Committee (MPC) meeting on 31 July. This will likely be the final cut in the current downward cycle.' She adds that the low inflation environment will aid the recovery of salary earners' purchasing power. 'With average salary increases expected to be between 5% and 6%, 2025 will be the second consecutive year of real increases in salaries.'
The Citizen
25-06-2025
- Business
- The Citizen
Take-home pay slides for third month with grim job opportunities and earnings
Are you earning the average take-home pay of R17 296 and is it enough to cover all your expenses or are you affected when it decreases? The average take-home pay slowed for the third consecutive month in May, reflecting the impact of a subdued economic environment with stalled growth in the first quarter and a weakening global outlook, currently fuelled by the heightened volatility in the Middle East. According to the latest BankservAfrica Take-home Pay Index (BTPI), which tracks approximately 3.8 million salary earners in South Africa, the nominal average take-home pay decreased to R17 296 in May, 1.3% lower than the R17 532 registered in April, Shergeran Naidoo, BankservAfrica's head of stakeholder engagements, says. However, this figure remained significantly higher than the R15 903 recorded in May 2024. 'The upward trend in take-home pay from mid-2024 to early 2025 has been a positive development. However, recent months reflect a U-turn, with 2025 proving to be a volatile year so far, marked by multiple global shocks accompanied by a good dose of local challenges,' Elize Kruger, an independent economist, says. 'Downward revisions to global as well as local economic growth prospects have lowered confidence levels and put a pause on investment decisions, as investors and households hold back on their spending decisions. Together, these could hurt employment and earnings prospects of salary earners in the coming months.' ALSO READ: Capitec CEO tops banking pay charts — but how do staff salaries compare? A look at how SA's top five banks pay Quarterly Employment Statistics show average take-home pay of R28 289 According to the Quarterly Employment Statistics for the first quarter of 2025, the average monthly earnings paid to employees decreased by 0.1% from R28 316 in November 2024 to R28 289 in February 2025. According to the BTPI, take-home pay, adjusted for inflation, increased by 1.1% in May to R14 832 compared to R15 003 in April, but remained 5.8% higher than year-ago levels. 'The significant moderation in consumer inflation continues to have a positive impact on salary earners and their purchasing power, with the latest headline inflation figure for May 2025 at only 2.8%. 'However, the recent spike in international oil prices, due to the escalating conflict in the Middle East, could result in higher-than-expected headline inflation in the coming months and into 2026, Kruger says. She points out that the international Brent Crude Oil price increased to around $78/barrel after the US's attack on Iran's nuclear facilities, but talks about a ceasefire quickly triggering a reversal with oil prices dipping below $70/barrel again. 'Against expectations and despite the global volatility, the rand exchange rate remained notably resilient, providing a marginal offset of the higher oil prices on fuel price expectations. With the daily under-recovery at pumps running between R1.50/l for petrol grades and R2.70/l for diesel in recent days, it is clear that economic pain is on the radar for salary earners and the economy at large.' ALSO READ: Take-home pay increases significantly in 2024 Petrol increases coming that will affect take-home pay Kruger points out that petrol prices are forecast to increase by about R1/l and the prices for diesel by R1.30/l on 2 July, and further increases could be expected in August. 'These will push headline inflation upwards towards 5% by year-end, ahead of the 3.6% forecast for 2025. 'Concerningly, with the higher base calculation of 2025, the forecast average headline inflation for 2026 could be well above 4.5%, eroding the positive effects of lower inflation and likely triggering more conservatism from the South African Reserve Bank (Sarb). 'Any further monetary loosening looks unlikely at this stage, considering that the Middle East conflict is intensifying and the resultant negative impact on local fuel prices. Still, despite the negative developments outlined, 2025 is expected to be the second consecutive year of positive real take-home pay growth, supporting demand in the economy.' ALSO READ: Salary survey shows gap between increases and inflation narrowing Remchannel survey shows average salary increased by 5.82% in 2025 Meanwhile, the Remchannel Salary and Wage Movement Survey, a biannual report by Old Mutual published in April 2025, indicated that the average salary increased by 5.82% in 2025, compared to 6.09% in the previous year. Kruger says this trend suggests a more cautious approach by employers, who must also prioritise cost control amid a constrained economic environment. Interestingly, she says, the report revealed a reduced overall staff turnover rate of 13.5%, reflecting a market with fewer new job opportunities due to widespread downsizing by companies. She emphasises that this data confirms the financial pressures employees live with, as 39% of those who resigned were seeking better pay and career growth, while 31% left due to dissatisfaction with their current roles. 'With the local economy stalling in the first quarter and the weakening global backdrop adding to the downside scenario, the prospects of favourable earnings and employment opportunities have dimmed. ALSO READ: Salaries decreased by 2% in April, but higher than a year ago Policies must foster rather than deter employment in SA 'The latest Quarterly Employment Statistics survey released by Statistics SA indicated that total employment in the formal non-agricultural sector decreased by 74 000 in the first quarter of 2025, with employment falling from 10.65 million people in December 2024 to 10.58 million people by March 2025. 'According to the survey, 95 000 jobs were lost between March 2024 and March 2025. The Labour Force Survey, which also included the informal sector, agricultural sector and employment in households, echoed the pressure, showing that the unemployment rate ticked higher to 32.9% in the first quarter, with 291 000 job opportunities lost. 'The unemployment situation in South Africa remains a crisis and deserves to be one of the top priorities of government. It is imperative that government pushes forward on structural reforms across sectors such as energy and logistics. 'This could contribute towards solving our local predicaments, lifting the local economy's medium-term growth potential, but government must also ensure that policies and laws will foster rather than deter employment in South Africa.'
The Citizen
11-06-2025
- Business
- The Citizen
Economic activity picked up for the first time in 8 months in May
It is good news, but there are still many risks that could bring the economic activity down again. Economic transactions picked up in May for the first time in eight months, bringing some relief after months of stagnation. A part of May's improvement stems from wiping out the weakness evident in the index in April. According to the BankservAfrica Economic Transactions Index (BETI), which measures the value of all electronic transactions cleared through BankservAfrica on a monthly basis at seasonally adjusted real prices, economic activity rebounded in May, although it is too early to tell if this positive trend will hold. Shergeran Naidoo, head of stakeholder engagements at BankservAfrica, says the BETI improved to an index level of 138.3 in May, up from the 136.2 recorded in April, breaking an eight-month trend of sideways movement. Despite the shift, notable risks remain, and more evidence of sustained higher economic activity must be delivered before the narrative of a subdued growth environment can change. 'The number of transactions cleared through BankservAfrica in May reached an all-time high of 176.3 million compared to 167.9 million in April, surpassing the previous record of 172.4 million in March 2025.' ALSO READ: Economic activity in SA struggling to gain momentum Too early to call a change in the trend for economic activity Elize Kruger, an independent economist, says while the latest figure is encouraging, it is too early to call an imminent change in trend as the economic environment has not changed materially in May, and notable risks remain. 'In addition, the recovery in economic activity in May followed the month of April when the world was hit by the US announcement of punitive import tariffs, and subsequently an evolving trade war developed with a great deal of volatility from day to day as markets plummeted and global and local growth forecasts were slashed. 'Confidence levels across the globe and in South Africa were knocked by the sheer uncertainty that these developments brought. 'However, with some tariffs put on ice and several countries entering, more favourable trade agreements, averting a worst-case scenario. Markets responded with relief rallies and a cautious return of confidence, albeit from a low base.' However, she says, the BETI is still 1.4% higher, and the uptick remains encouraging as all of its components increased in value terms during May. 'The most notable performances were the heavily weighted EFT credits, Real Time Clearing and PayShap transactions. 'The standardised nominal value of transactions also increased to R1.351 trillion in May compared to R1.320 trillion in April, with the resultant average value per transaction covered in the BETI increasing to R7 618, higher than April's R7 485. 'All payment streams increased in both volume and value terms during May.' ALSO READ: Economic activity still moving sideways but optimism increases Two PMIs and new car sales also added to increased economic activity Kruger says two other timeous economic indicators also posted stronger readings. The S&P Global South Africa Purchasing Managers' Index increased to 50.8 in May, driven by the sharpest uplift in private sector output in four years. Naamsa also reported that the strong momentum in the local vehicle sales market continued into May 2025. Total vehicle sales increased by 22%, with year-to-date sales up by 12.6% compared to the same period a year earlier. New car sales surged by an impressive 30%, while year-to-date, sales were a notable 21.2% higher. On the other hand, she points out that the seasonally adjusted Absa Purchasing Managers' Index (PMI), reflecting on prospects in the manufacturing sector, remained in contractionary territory for a seventh consecutive month at 43.1 index points. 'Furthermore, the BETI rebound is a timely development, given that the economy started 2025 on the backfoot as seasonally adjusted quarterly growth of only 0.1% was registered in the first quarter with sectors such as mining, manufacturing and construction now in technical recession.' says Kruger. ALSO READ: Structural reform is silver bullet needed for SA economy to grow – OECD Economic growth adjusted downward, but inflation stays low While economic growth forecasts for 2025 have been revised downward, with the latest Reuters consensus among economists now projecting real gross domestic product (GDP) growth at 1.2%, down from 1.7% in January. Carpe Diem Research offers an even more cautious outlook, forecasting growth at just 1.0%. On the more positive side, Kruger says local inflation remains well under control, with headline inflation at 2.8% in April, below the target band of the South African Reserve Bank (SARB) of between 3-6%, with the average 2025 forecast around 3.4%. 'The favourable inflation environment created ample scope for the Sarb to cut interest rates. Even after a 25 basis points cut in May, the repo rate remains quite high at 7.25%, as real interest rates are still considered punitive for an economy muddling along, unable to gain meaningful momentum.' Kruger also points out that, helped by some weakness in the US dollar, the rand exchange rate recovered all of its losses after the US 'Liberation Day' announcements and trading at fairly strong levels. 'The low inflation rate will play a key role in supporting the recovery of salary earners' purchasing power. With average salary increases expected to be between 5% and 6%, 2025 will be the second consecutive year of real increases in salaries, which should support consumer spending.'
The Citizen
28-05-2025
- Business
- The Citizen
Salaries decreased by 2% in April, but higher than a year ago
If you feel that your wallet was a bit emptier in April than the month before, you are not alone. Salaries did decrease in April. Salaries decreased by 2% in April compared to March, but are still higher than a year ago, as take-home pay slowed again. Mounting pressure on salaries also puts this week's interest rate decision in the spotlight, raising hope for relief among salary earners. According to the Bankservafrica Take-home Pay Index (btpi), the average nominal take-home pay recorded a second consecutive month of moderation in April. The Index reflects data from approximately 3.8 million salary earners. 'The nominal average take-home pay declined to R17 495 in April 2025, down 2.0% from R17 846 in March. 'Despite this deceleration, levels remain significantly higher than the R15 370 recorded a year ago,' Shergeran Naidoo, BankservAfrica's head of stakeholder engagements, says. He points out that the upward trend in take-home pay from the middle of last year marks a positive development after years of sluggish growth and salaries lagging behind inflation. However, he says, the escalating global trade war has dampened sentiment worldwide, affecting confidence in South Africa and slowing economic activity as investors and households pull back on their spending. ALSO READ: Here's what some of South Africa's SOE bosses earn Economic forecasts not great, affecting salaries too Elize Kruger, an independent economist, says although the worst-case scenario for the trade war impact seems to have been averted, economic growth forecasts were trimmed notably for the global economy, while local growth prospects are also expected to disappoint. 'This could hurt employment and earnings prospects of salary earners in South Africa in the coming months.' Real take-home pay, adjusted for inflation, also moderated by 2.2% to R15 005 in April 2025, compared to R15 344 in March, but is still notably higher than a year ago. 'The significant moderation in consumer inflation during 2024 had a positive effect on the buying power of salary earners and the scenario is continuing into 2025, with the latest headline inflation figure at only 2.8% for April 2025,' she says. With headline CPI now forecast to average to be around 3.4% in 2025 compared to 4.4% in 2024, it will be the lowest annual rate since the 3.3% recorded in 2020. The recent increase in the rand exchange rate, combined with a lower international oil price will result in further fuel price declines in June despite the increase in the fuel levy, while the sluggishness in the economy keeps demand-driven pricing pressures well contained. ALSO READ: Capitec CEO tops banking pay charts — but how do staff salaries compare? A look at how SA's top five banks pay 2025 expected to be a good year for salaries 'With this favourable inflation scenario, 2025 will likely be the second consecutive year of positive real take-home pay growth, supporting demand in the economy,' Kruger says. However, with the elevated cost of living, additional taxes announced in Budget 2025, with no adjustment to tax brackets and an inflation-related fuel levy increase, as well as continuing high interest rates, salary earners remain under pressure. Early indications are that the real gross domestic product (GDP) growth rate for the first quarter of the year will likely be zero, or even negative. With the current repo rate at 7.5%, the real repo rate stands at 4.1%, which is a very restrictive stance if the neutral real repo rate of 2.8% is considered, Kruger says. 'A decrease in the cost of credit could go a long way to offer relief to households and the business sector, boosting confidence levels somewhat, while also lowering the hurdle rate on capital expenditure programmes. 'While a more aggressive cut would have been welcomed, the South African Reserve Bank (Sarb) is likely to cut interest rates by only 25 basis points at best at its Monetary Policy Committee meeting on Thursday.' ALSO READ: Increase in take-home pay in January shows positive start to 2025 Slightly higher salaries not enough – we need repo rate cut With the economy stalling in the first quarter and global pressures mounting, accelerating structural reforms is now critical. Tackling energy, logistics and governance challenges will help to unlock growth and buffer against external shocks. 'The current low inflation environment, supported by lower international oil prices and the rand's notable recovery in recent weeks, provides an opportunity for monetary policy to play a role in offsetting some of the pain inflicted on the economy by recent global developments, as many developing and developed economies have already done,' Kruger says. 'While the debate about lowering the inflation target band is ongoing, it should not prolong the pain inflicted on the economy by exceptionally high interest rates.'
