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Other services bounced back on the lifting of lockdown restrictions

Confidence in the other services sector bounced back from 7 to 17 in the third quarter. While the Q2 survey took place during alert level 4, level 2 applied at the time of the Q3 survey. The performance of the respective sub-sectors related closely to the lifting of the lockdown restrictions. It was too early to estimate the impact of the lifting of the inter-provincial leisure travel ban on hotels. Activity in restaurants remained weak. Property sales bounced back, but property management struggled. Business services contracted at the same rate than previously.

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Economic Prospects 2020Q4

Despite upgrades to the real GDP outlook, a difficult and protracted economic recovery remains the baseline scenario.

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Sentiment in the civil construction sector, as measured by the FNB/BER Civil Confidence Index, increased to a still low level of 11 in 2020Q3, from 5 in 2020Q2. Underpinning the low confidence was continued pressure on activity, which, while improved compared to 2020Q2, is likely well below the level recorded in 2019Q3.

Following a robust increase in August, the Absa Purchasing Managers’ Index (PMI) ticked up further to 58.3 index points in September. The shift to a lower lockdown level mid-month likely drove the further improvement in business conditions in the local manufacturing sector. The BUSINESS ACTIVITY INDEX (displayed on the graph) fell back slightly in September, but continued to signal a monthly expansion.

After falling from 18 to an all-time low of five in the second quarter, the RMB/BER BCI rebounded to 24 in the third quarter. Business confidence recovered in all the sectors making up the BCI. Given the close historical relationship between real GDP growth and the RMB/BER BCI, the third quarter survey results foreshadow an improvement in the third quarter relative to the second quarter.

The FNB/BER Consumer Confidence Index (CCI) increased from -33 to -23 in the third quarter. The partial recovery can be ascribed to increases in the household finances and time-to-buy durable goods sub-indices. The COVID-19 pandemic and related economic restrictions delivered a profound blow to consumers' willingness and ability to spend.