The SARB’s Composite Business Cycle Indicators

Abstract

There is a fairly long history of analysing composite business cycle indicators in South Africa. The first set of composite indicators was developed by J.E.M. Van Coller and disseminated by the Bureau for Economic Research at Stellenbosch University. This was followed shortly thereafter by another set of composite indicators developed at and still disseminated by the South African Reserve Bank, which is the main focus of this chapter. Following a brief discussion of Van Coller’s composite business cycle indicators, the chapter describes the development and evolution of the composite business cycle indicators disseminated by the South African Reserve Bank (SARB). The composite indicators are analysed in terms of the selection criteria used, the component series included and the compilation methodology applied. The performance of these composite indicators around reference turning points in the South African business cycle is also evaluated by means of a historical turning point analysis, revealing their usefulness in predicting cyclical turning points in the South African economy.