20091231

JOHANNESBURG (Reuters) - Demand for credit by South Africa's private sector fell for the second consecutive month in the year to November, data showed on Thursday, pointing to an economy still struggling despite exiting recession.

Africa's biggest economy emerged from its first recession in almost two decades in the third quarter, but recovery is expected to be slow, with household and company finances remaining tight.

Central bank figures showed that credit demand fell by 1.59 percent year-on-year in November after a contraction of 0.42 percent in October -- the first since 1966.

During the same period, growth in the broadly defined M3 measure of money supply slowed to 0.58 percent compared with 2.67 percent growth in October.

This was largely in line with a Reuters poll last week which forecast that private sector credit demand would decrease by 1.55 percent year-on-year in November, while annual M3 growth was seen at 0.45 percent.

"The credit numbers ... reflect that the economy has still not turned around and that should indicate that interest rates should remain at the current levels for the foreseeable future," said Sarel Pretorius, head of fixed income at Thebe Securities.

The Reserve Bank has left rates unchanged at 7.0 percent at its last 3 policy meetings after reducing them by a cumulative 500 basis points between December last year and August to help the economy.

The cuts unwound rate increases implemented between June 2006 and June 2008 as the bank sought to tame inflation.