SA's composite leading business cycle indicator increased by 1.8% in June 2011 to 133.8 compared with the preceding month's 131.4, as seven of the ten component time series that were available for June 2011 increased, while three decreased.

Data released by the Reserve Bank on Tuesday showed that the largest positive contributions to the movement in the leading indicator in June came from a notable increase in the number of residential building plans passed, particularly for flats and townhouses, as well as a marked increase in the twelve-month percentage change in job advertisement space, largely due to the low base that was created in June 2010 as a result of the hosting of the FIFA World Cup tournament.

The major negative contributors were the prices of all classes of shares traded on the JSE, as well as the interest rate spread.

The composite coincident business cycle indicator decreased by 0.5% in May 2011 compared with the preceding month - its first monthly decline after eight consecutive increases.

The composite lagging business cycle indicator decreased by 0.4% in May 2011

compared with the preceding month. The lagging indicator appears to have bottomed out after January 2011, the SARB noted.

The Reserve Bank uses more than 200 economic time series to determine the turning points of the South African business cycle. Using these indicators, the leading, coincident and lagging composite business cycle indices are produced, indicating the direction of the change in economic activity rather than the level of economic activity.

Source: I-Net Bridge