Positive signs that the downturn might be over.

[Dave A]

I know one swallow does not make a summer, but the inflation data and credit extension figures are signs that we may have bottomed out on this cycle.

South Africa's targeted CPIX (consumer inflation less mortgage costs) slowed for the first time in a year to 13% year-on-year in September from 13,6% in August, below forecasts, official data showed on Wednesday.

Statistics South Africa said the all-items consumer price index (CPI) increased by an annual rate of 13,1%, compared with 13,7% in August.

On a monthly basis, CPIX was at 0,1% in September, while headline CPI increased by 0,2% month-on-month.

According to Nicky Weimar, economist at Nedbank: "It's certainly good news. It seems, although it is little early to tell, that August was the peak for CPIX. From the Reserve Bank perspective, it's a good trend and strengthens the case for a rate cut in the short term."
full story from M&G here

Private sector demand for credit slowed to 16.42 percent in September, below forecasts, from 18.64 percent in August, South African Reserve Bank bank data showed on Wednesday.

Growth in the broadly defined M3 measure of money supply eased to 15.23 percent compared to 15.42 percent previously in the same period.

Efficient group economist Fanie Joubert said: "The money supply (figure) is more or less as we expected. We expected a rise of 15.3 percent. The credit figure is lower-than-expected. We expected a rise of 17.7 percent.

"It indicates that the trend, after the increase, is continuing to come down, which is a good thing, especially given the sharp increase (weakening) in the rand, which caused some fears that we could see an extra interest rate hike.
full story from Business Report here

So that leaves the Rand - and that seems to be steadier too.

Early signs, like the first little leaves of spring. I'm sure the pain is not over, but it could start easing off just a little.

[Graeme]

The big test will be in about 6 months time when the first of the company results for the term embracing this period are announced. If profits are well down, then equity prices will be down as well and that will well and truly mark the beginning of real trouble. Up 'till now the savage falls in equity prices have been based on speculation but when actual profits are seen to have dropped and shareholders are hit in their pockets it will all become horribly real.

[Dave A]

But surely the fundamental principle underlying the drop is a severe lowering in expectations anyway? I would have thought lower profits are already factored into the price. After all, it's been quite a plunge.

I also think from a smaller business point of view, it's not so much the share price but the constipation of cash flow that's causing grey hairs. Collecting money at the moment is just a bitch. Those that have it are clinging onto it for dear life, and those that don't are stuck waiting on those that have.

It's the sense of insecurity that's aggravating things. The money needs to start moving around a little easier and it's going to need some sense of predictability returning to the market. Even if it comes with lower profits, the money needs to move.

[Dave A]

And to complete the trifecta:

South Africa's producer price inflation (PPI) slowed to 16% year-on-year in September from 19,1% in August, below expectations, official data showed on Thursday.

Statistics South Africa said month-on-month PPI, representing domestic output, was also below forecasts at -3,5% compared with 0,5% previously.

Economists polled by Reuters last week forecast that annual PPI would be steady at 19,1%.
full story from M&G here

[IanF]

And to complete the trifecta:

Dave,
We need to wallow so why so positive, did you win the lotto?

[Dave A]

We need to wallow

I don't think the pain is over yet. It's going to take a while so you can still enjoy your wallow if you must But it does indicate a shift in momentum.

As for the lotto? Took a ticket about two weeks ago on a whim - not even one number. When it comes to making money, it looks like slogging it out is going to have to be it for me.

[duncan drennan]

The PPI stat is encouraging. Will the calculation of PPI change in any way in the future? I know the basket of goods for CPIX is changing, as well as the number that the reserve bank uses for inflation. They are going to change the basket, as well as use CPI in the future. The will use some form of housing rental value instead of mortgage costs in their CPI for inflation targeting.