The rate of growth of South Africa's broad M3 money supply measure rose by 23.18 percent in the year to end-November from 23.39 percent in the year to end-October, the South African Reserve Bank (Sarb) said on Friday.

Credit extension to the private sector (PSCE) grew at a rate of 22.57 percent year-on-year (y/y) from 22.27 percent in October.

According to the new definition, which excludes loans made to provincial governments, credit extension growth was at 21.74 percent from 21.03 percent in October.

South Africa's total domestic credit extension had a growth rate of 23.91 percent y/y in November from 23.95 percent in October.

Total loans and advances, which is PSCE excluding investments and bills discounted, recorded a 23.15 percent y/y increase from October's 24.47 percent rise.

The Sarb also indicated on Friday that its international liquidity position rose to $30.669-billion in November from $29.929-billion in October.

The rate of growth in South African credit extension to the private sector (PSCE) was expected to have increased at 21.8 percent y/y in November.

M3 money supply aggregate growth rate was expected to have increased in November at 22 percent year-on-year.

Overall credit was at 22.3 percent in June 2006 when interest rates were first hiked by 50 basis points.

A bit disappointing

Dennis Dykes, Nedbank group economist said, "overall, the figure is a bit disappointing as it remains relatively high. However, within the numbers there some signs that consumer spending is slowing".

"Instalment sales and leasing finance are at 13.6 percent versus 14.7 percent before. Mortgage advances are also slowing at 24.8 percent year-on-year from 25.3 percent, but this category remains very strong. There are probably technical reasons for this where it is used almost as an overdraft. It could take some time to slow."

"Overall, though, investments and bills rose 10.3 percent. This is a function of money market action and the capital market, but it is a very, very erratic category. It was at five percent in the previous month and was lower by 4.9 percent in June. Year-on-year it is up 7.7 percent after having been very much negative."

Meanwhile, Fanie Joubert, economist from Efficient Group said, "the credit numbers are slightly higher than expected, so it is not a nice number. However, if you look inside the numbers, then you see mortgages and other continue to come down".

"However, instalments have continued to rise from June. So the level at which these numbers are at will provide little counter to the strong and rising inflation figures. So while it is good that there is some cooling, the levels at which they are rising are too high."

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