Leading business indicator drops sharply

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The SA Reserve Bank's leading indicator plunged by 8.7% in April

plunged in April, as SA experienced the harshest phase of the nationwide lockdown imposed to slow the Covid-19 pandemic.

Distortions created by the lockdown affected some of the underlying data series, resulting in downward revisions for March’s data, with the annual change revised from a decline of 1.6% to a steeper fall of 3.1%. Meanwhile, the month-on-month figures for March were revised from a 0.7% increase to a decline of 0.9%

“The exogenous nature of the Covid-19 pandemic implies that it was not possible for the composite leading business cycle indicator to have predicted its impact on economic activity in advance,” the Bank said in the data release. But the gradual downward trend in the leading indicator “suggested a slowdown in real economic growth even before the start of the pandemic.”

 

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