The rate of growth of South Africa's broad M3 money supply measure rose by 21.00 percent in the year to end-March from a revised 20.86 percent (21.07 percent) in the year to end-February, the South African Reserve Bank said on Wednesday.

Credit extension to the private sector (PSCE) grew at a rate of 22.62 percent year-on-year from 20.79 percent in February.

The rate of growth in PSCE was expected to have increased at 20.5 percent year-on-year in March, an I-Net Bridge poll found.

M3 money supply aggregate growth, meanwhile, was expected to have increased in March at 20.7 percent year-on-year.

Overall credit was at 22.3 percent in June 2006 when interest rates were first hiked by 50-basis-points and the current number will be an important factor being monitored by the central bank.

This is what leading economists had to say about the data:

Carmen Altenkirch, Nedbank:

“I would have expected credit extension to have remained the same or at least have come down. However, going forward we should see much slower growth given April's interest rate decision — and if Governor Mboweni does decide to hike in June. If you look at interest service costs as a percentage of disposable income at the moment it bites into the consumer and household spending comes down. We are reaching a critical level. Interest rates are not reflected in the mortgage numbers, but new mortgage approvals have come down dramatically in the past few months. And then if you talk to car dealers — few people can afford to take on new credit.”

Fanie Joubert, Efficient Group:

“It is not a good figure and is higher than expected. What is worrying is other credit items, which went from 23.9 percent to 29.5 percent year-on-year — it is a big increase. Even the nominal figure rise of R35.6-billion — going back to 1994 — is the largest monthly rise in that item I can find. Remember it includes credit cards and overdrafts and indicates people needed to make use of that type of credit — which is worrying, as it is not asset backed. We are working on a theory that because of the weaker rand companies taking more credit domestically — but it is only a theory right now.”

Shireen Darmalingam, Standard Bank:

“It wasn't a great number at all. Generally, I think consumer spending has started slowing — there is that evidence if you look at things like vehicle sales. But in this data it was other loans and advances that pushed it up. This could be because consumers started using other credit to finance the debt they find themselves in.”

I-Net Bridge