The South African seasonally adjusted leading economic indicator was reported by the South African Reserve Bank (SARB) to have dipped to 123.1 in January from a revised 123.9 (125.9) in December. It leads GDP growth by around a year.

Last year's best was the 129.1 set in May. However, it has been a winding downhill ride as tighter conditions started to slow various sectors. This comes after South Africa's economy had been enjoying the best phase of growth since the Second World War.

The coincident indicator for December 2007 was reported at 155.9 from a revised 156.2 (156.3), while the lagging indicator was reported at 117.2 from a revised 117.2 (116.5).

The coincident indicator is an economic factor that varies directly and simultaneously with the business cycle, thus indicating the current state of the economy. This indicator had been rising until January.

The lagging indicator changes after the economy has already begun to follow a particular trend.

The leading indicator provides a good forward barometer of where the economy is probably headed. Readings at the 120 mark indicate that strong growth can be expected.

Most economists expect the current year to be the harbinger of slower growth due to global equity and credit problems, the power crisis and higher rates for longer. South Africa's CPIX inflation due tomorrow is expected to underpin this and possibly point to another rate hike come 10 April.

The leading indicator had been over 120 and nearer to 130 for the whole of 2007, but June was the first time no growth on the monthly index level had been recorded.

SARB uses over 200 economic time series to determine the turning points of the South African business cycle. Using these indicators, leading, coincident and lagging composite business-cycle indices are produced that indicate the direction of the change in economic activity rather than the level of economic activity.

South Africa's real gross domestic product at market prices on a quarter-on-quarter seasonally adjusted annualised basis rose by 5.3 percent in the fourth quarter of 2007 from a revised 4.8 percent (4.7 percent) in the third quarter of 2007, Statistics South Africa (Stats SA) said on Tuesday.

Full year GDP was placed at 5.1 percent from the 5.4 percent seen in 2006.

The dip in the coincident indicator reflects what most analysts expect — slower growth than this in the first quarter of the year.

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