StatsSA reported this morning that real GDP grew by 3.2% annualised in Q4 2011. Q3 GDP was revised up from 1.4% to 1.7%. A breakdown of the data showed trades +5.2%, government +4.4%, manufacturing + 4.2%, transport/communications +3%, finance +2.3%, construction +2% mining +1%, and agriculture -5%.
Pretty broad-based growth for Q4 in other words.
ETM has been onto the money supply driven business cycle upswing for months already. Back in September 2011, , when local economists were still growing bearish of the consequences of the Europe crisis, we wrote to ETM Macro Strategy clients in the Business Cycle Monitor that
Clients should already be looking to the next mini-cycle, and that is being driven now by weakening price pressures and resurgent money growth. If this persists then it would be unwise to get too bearish on SA growth on a forward-looking basis.
2011 growth data is unlikely to be too good at all, but if credit keeps picking up and price pressure dissipates (which we expect it will), Q4 and then Q1 2012 growth data is likely to outperform expectations.
Watch out for an improvement in headline economic data during this period, particularly of PMI and capital intensive manufacturing data. Retail spending should also find some support into year-end after a few more disappointing data readings still to come.
This is not a sustainable economic boom. The seeds of the next business cycle bust are being sown right now.
That said, Q1 2012 GDP growth is likely to be even stronger than Q4. Also, a wave of price inflation at the consumer level is set to follow going into year-end.