SA’s economic spending on the up in Q3

Spending in SA improved in the third quarter as economic growth grew slightly over the period and government spending increased, although at a slower pace.

The data, however, also point to extreme weakness in investment spending by private companies and a moderation in spending by households. This is in line with persistently low confidence levels and a moderation in income growth.

Real gross domestic expenditure advanced at an annualised 0.8% in the third quarter after a marked decline of 7.2% in the second quarter, the Reserve Bank’s quarterly bulletin showed on Tuesday.

“A slower pace of de­accumulation in real inventory holdings alongside an acceleration in real final consumption expenditure by general government fully outpaced the slower growth in expenditure by households and real gross fixed capital formation,” the Bank says.

Household spending on durable and nondurable goods contracted while spending on semidurable goods remained firm, suggesting which retailers may have better festive­season sales.

Household debt and the cost of servicing such debt increased in line with an increase in interest rates.

“Real incomes are under some pressure (and) there is not much job creation,” the Bank’s head for economic reviews and statistics, Johan van den Heever, says.

Investment spending by public corporations increased while that by private companies contracted slightly.

A contraction in investment spending by private companies is not supportive of economic growth.

By Ntsakisi Maswanganyi for

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