One more interest rate cut is needed for South Africa to shake off the recession, according to the latest monthly Sake24 and BoE Private Clients provincial barometers released on Friday.

The study provides a view of the private sector economy health of four provinces namely Gauteng, Western Cape, Eastern Cape and the Free State.

The barometers for July showed that the full effect of lower interest rates - which have dropped five percentage points since December 2008 - still had to filter through the economy and this was expected to take some months.

Darryl Owen, chief investment officer at BoE Private Clients, said all the signs were there to justify the need for one more interest rate cut of 50 basis points later this year - including below average growth expectations for next year.

The latest indicators showed that the Gauteng and Eastern Cape barometers were down 13,3% and 15,3% respectively from July 2008.

However, the indices were only 3,2% and 0,7% down from June.

Economist Mike Schüssler, the developer of the barometers, said the declines could be attributed to the struggling vehicle and steel industries in the two provinces.

The Free State Barometer was 5,4% lower year-on-year, but only 1,4% down from June, the study found.

The Western Cape Barometer showed the same movement, with 9,7% and 2,9% respectively.

"It is clear that the month-to-month data show that the recession is near its end.

"The year-on-year figures still look very bad, but I still believe we are past the worst," Schüssler said.

The Western Cape and the Free State were seeing some relief, while the turning point for Gauteng and the Eastern Cape was still a few months away, he said.

On a sector level it was also clear that month-on-month declines were falling into single digits, after activity levels declined by double digits nearly every month at the end of 2008 and the beginning of 2009.

There were also positive signs in the transport sector which was directly linked to the levels of economic activity.

Schüssler said it was only the retail of durables like cars, furniture and jewellery that remained in trouble and would stay there for some time.

According to the study, another positive sign was that fuel sales picked up in all four provinces.

"This may partly be attributed to lower prices, but it also suggests a slight increase in business activity levels," Schüssler noted.

He said the barometers clearly showed that the recession's momentum was slowing down.

"I think we have reached a bottom in Western and Free State.

"The provincial economies of Gauteng and the Eastern Cape have not bottomed out, but I suspect a bottom within the next few months."

Owen said his team subscribed to the outlook that the "uneven" road to global recovery would continue on the back of widespread loose monetary policy and economic optimism.

"The exuberant recovery that we have seen in global equity markets over the past few months may have been overdone in the short term, but has traction in the medium term."

Owen said local consumers still under pressure of unemployment and deleveraging, continued to tighten their belts.

Mortgage advances had fallen for the first month since September 2002 and leasing and installment finance had fallen for the ninth consecutive month.

Both of these contributed to the continued decline in the rate of private sector credit extension to 3.40 percent year-on-year, he said.