Growth in Domestic Expenditure Rises to 2.6 Percent

Growth in real gross domestic expenditure rose to 2.6% in the third quarter, said the South African Reserve Bank (SARB) on Monday.

“Following an increase of 0.5% in the second quarter of 2014, growth in real gross domestic expenditure accelerated to an annualised rate of 2.6 % in the third quarter,” said the central bank in its December Quarterly Bulletin.

“Although consumer confidence retreated somewhat in the third quarter of 2014, it still remained marginally above the low levels recorded in the second half of 2013,” said the central bank.

The bank said acceleration in growth in real final consumption expenditure by households, along with positive growth in real gross fixed capital formation and inventory holdings, more than neutralised slower growth in expenditure by general government over the period.

“The level of real gross domestic expenditure in the first three quarters of 2014 was only 0.4% higher than in the corresponding period of 2013,” noted the bank.

Having lost some momentum since the first quarter of 2013, real final consumption expenditure by households picked up slightly in the second and third quarters of 2014, as did real disposable income.

Growth in real expenditure by households accelerated from an annualised rate of 1.1% in the second quarter of 2014 to 1.3 % in the third quarter, due to higher real outlays on all four components of spending.

Spending on all durable categories increased over the period, with growth in spending on personal transport equipment- the biggest component of durable goods – accelerating robustly in the third quarter of 2014.

Spending on this category was probably boosted by the release of a number of new passenger vehicle models, attractive packages on offer, and pre-emptive buying in anticipation of possible price increases in the remainder of the year. –

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