A faster, but still incomplete recovery

For the fourth quarter in a row, Stats SA reported that real GDP recovered at a faster-than-expected pace. GDP expanded by a seasonally adjusted (unannualised) 1.2% q-o-q in the second quarter of 2021. This was an acceleration from the downwardly revised 1% (from 1.1%) recorded in 2021Q1.The level of real GDP is still 1.3% below where it was in 2019Q4 (i.e. pre-COVID). Therefore, the GDP recovery remains incomplete. In addition, the Level 4 COVID-19 lockdown restrictions and the looting shock in KwaZulu-Natal and parts of Gauteng are likely to interrupt the recovery in the third quarter.

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After falling to 13 in 2021Q2, the FNB/BER Civil Confidence Index edged higher to 17. The index has been around the 20-point mark since the middle of 2017. The current index level means that the vast majority (more than eighty per cent) of respondents are dissatisfied with prevailing business conditions.

The seasonally adjusted Absa Purchasing Managers’ Index (PMI) rebounded in August 2021 following a record single-month decline in July. The PMI more than recovered from last month’s steep decline and rose to 57.9 points in August from a very low 43.5 points in July. In comparison, the PMI stood at 57.4 in June.

After surging by 15 points to 50 in the second quarter, the RMB/BER Business Confidence index (BCI) retreated to 43 in the third quarter. The unexpected shock of the looting, combined with a variety of other negatives, knocked business confidence hard in the third quarter. However, retail and wholesale trade confidence (which held up relatively well) cushioned the blow, while manufacturing confidence only fell by five points after the strong 21-point gain in the second quarter. Thanks to this resilience, the adverse developments in the third quarter are likely to only deliver a temporary setback to what otherwise remains a cyclical economic recovery.

Having slipped from -9 to -13 index points during the second quarter of 2021, the FNB/BER Consumer Confidence Index (CCI) recovered some lost ground to -10 in the third quarter of 2021.