Core Viewpoint - South Africa's composite leading business cycle indicator increased by 1.6% month-on-month in August, marking a significant acceleration from the previous value of 0.9%, and reaching the highest growth rate in 16 months since April 2024 [1] Group 1: Leading Indicator Components - The leading indicator is composed of ten sub-components, with eight contributing positively to the monthly growth [1] - Key factors driving the increase in the leading indicator include a rise in approved residential building plans and an accelerated six-month smoothed growth rate in job advertisements, both of which are seen as leading signals for future economic activity and labor market expansion [1] Group 2: Negative Contributions - Some components negatively impacted the leading indicator, notably the deterioration of the Rand/BER business confidence index and a narrowing interest rate spread, which were the main adverse factors for the month [1] Group 3: Current Economic Activity - The composite coincident indicator rose by 0.4% month-on-month in July 2025, primarily driven by growth in actual sales in wholesale, retail, and automotive trade, indicating ongoing economic expansion [1] - The lagging indicator, however, decreased by 0.1% month-on-month, with specific components and impacts not disclosed [1] Group 4: Economic Outlook - The continuous improvement of the composite leading indicator suggests a moderate recovery in the economy over the coming months, although structural challenges such as weak business confidence remain a concern [1]

Economic Overview - The current economic situation in the U.S. is perceived as not stable, with visible risks present [5][45] - The government spending is a long-term concern but provides short-term support [8] - The housing market is struggling due to high mortgage rates and prices, leading to a negative outlook for the real estate sector [7] Leading Indicators - Among the three debt sectors in the U.S., only government debt shows stable and high growth, indicating a persistent crisis-level deficit [3] - The economic sentiment is likened to a long-term hospital patient, suggesting that while some risks may have decreased, overall health remains questionable [4] Synchronization Indicators - GDP growth is expected to slow down, with projections of 2.5% for 2024, while this year may see around 1.5% [14][16] - Employment data shows a divergence across sectors, with cyclical industries facing significant challenges compared to non-cyclical ones [19][21] Lagging Indicators - The unemployment rate is rising but remains low, indicating a fragile job market where layoffs are minimal [18] - Inflation in durable and non-durable goods has not decreased, suggesting persistent pricing pressures despite economic challenges [22][24] Federal Reserve's Position - The Federal Reserve's decision-making is influenced by the balance between inflation and unemployment risks, with a focus on maintaining a neutral interest rate [31][36] - The Fed's current stance is to lower rates in response to rising unemployment risks, while still being cautious about inflation [36][46] Conclusion - The U.S. economy is showing signs of significant weakening, with the Federal Reserve likely to continue lowering rates if economic conditions deteriorate further [45][46] - The critical question remains whether the Fed will act to lower rates if inflation rises alongside a weakening economy, indicating a complex decision-making environment [46][47]

Core Insights - The report emphasizes that identifying the performance inflection point is crucial for the market to move out of the bottom-seeking phase, with market bottoms typically leading performance inflection points by 1-2 quarters [3] - The report highlights the importance of combining leading indicators with coincident indicators for better economic bottom assessments, as relying solely on coincident indicators may lead to delayed confirmations of market bottoms [3] - The report indicates that the key to breaking out of the bottom-seeking phase lies in the sustainability of M1 recovery, with household medium and long-term loans being a more critical indicator [3] Economic Indicators - The macroeconomic environment shows slight improvement, with the manufacturing PMI rising to 49.7% in June, still within the contraction zone [5][6] - In June, M1 and M2 both showed year-on-year increases, with M1 at +4.6% (previously +2.3%) and M2 at +8.3% (previously +7.9%), indicating a recovery in excess liquidity [8] - The social financing scale increased by 4.2 trillion yuan in June, which is 900.8 billion yuan more than the same period last year, with a notable recovery in government bonds and RMB loans [10][19] Loan Structure - The report notes a recovery in the loan structure, with household loans showing a year-on-year increase, while medium and long-term loans for households decreased [19] - For enterprises, medium and long-term loans increased year-on-year, and short-term loans also showed recovery, indicating a positive trend in credit structure [19] Market Conditions - The report states that the dual expansion of monetary and credit policies is supporting the A-share market, with signs of improvement in the economic fundamentals [19] - The report suggests that the recovery in leading indicators of the Pring cycle is accompanied by a slight decline in coincident and lagging indicators, indicating a complex market environment [20]