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Growth in credit demand by South Africa's private sector slowed to 5,13% year-on-year last month, compared with a 5,43% rise in February, central bank data showed on Friday.
This was below expectations of 6,05% year-on-year but the numbers are very unimpressive, Ilke Smit, Economic analyst at Metropolitan Asset Managers said.
"Even though household credit extension increased by R8,398bn during March 2011, corporate lending contracted by R9,997bn. Year to date, corporate credit has declined by R17,113bn since December 2010, as household lending has increased by R19,228bn. Therefore private sector credit extension has only increased by R2,11bn since December 2010 – a meagre 0.5% growth for the first quarter of this year," she said.
Corporates are investing and reinvesting very slowly post-recession. Few companies are hiring en-masse either.
"There was no evidence of a meaningful upturn in corporate borrowing in March’s credit usage figures - surplus capacity means there is little compulsion for corporates to expand operations," Investec economist Annabel Bishop said.
In March, credit extended to the government declined by R4,453bn, which brought total domestic credit extension down to R2,124trn. This is R6,052bn lower than the previous month, and only up 3,63% year-on-year from a year ago. Corporate credit extension is up 2,64% year-on-year. Household lending is up 7,37% year-on-year.
"Mortgage lending declined by R1,616bn to a total of R1,046trn. From a year ago, mortgage lending is only up by 2,89% year-on-year. Instalment sales increased once again, speaking to the growth the economy has been witnessing in vehicle and furniture sale sectors. These types of lending are mostly unsecured– which paints a fragile picture for retailers should the job market not commence on a sustainable recovery," Ms Smit.
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