The Financial Sector Forum

Snippets

• 23 Feb. SA National Budget 2012. Would you like to understand the implications yesterday's National Budget Speech delivered by Minister Pravin Gordhan could have on you? Sanlam experts unpack the Budget for you. View Sanlam's easy to understand translation and see how the National Budget affects you. View the video Budget review Budget in a nutshell Patrice Rassou, head of equities, at Sanlam Investment Management gives a short overview of the Budget highlights. Read more (more...)
• 23 Feb. Nedbank Economic Commentary: Producer inflation. Producer inflation came out lower than expected in January. Producer inflation declined to 8,9% y-o-y in January from 9,8% in December, against consensus forecasts of 9,5%. Over the month, producer prices rose by 0,3% following no change in December, mainly driven by a 0,6% rise in prices at manufacturing level, with food prices in particular rising by 0,7%. This was, however, partly contained by agricultural prices, which fell by 4,3% over the month, with food at the agricultural level dropping by 5% following a 2,3% increase in December. On an annual basis, agricultural and manufacturing prices were up by 7,9% and 7,6% respectively. Mining and quarrying prices rose by 7,7% y-o-y in January, while basic metals and metal products were up by 5,4% y-o-y and 11,4% respectively. (more...)
• 22 Feb. Nedbank Economic Commentary: Consumer Inflation. Consumer inflation rose more than expected in January. Headline consumer inflation rose to 6,3% in January, up from 6,1% in December last year and slightly above the 6,2% expected by the market. Over the month, retail prices rose by 0,6%, mainly due to higher food prices, which jumped by 1,5% on the back of relatively sharp increases in the prices of fruit, meat, fish, oils and fats as well as sugar and sweets. Prices of miscellaneous goods and services also rose sharply due to higher insurance premiums and financial service fees. (more...)
• 22 Feb. Composite business cycle indicators for South Africa. The composite leading business cycle indicator decreased by 0,4 per cent in December 2011 compared with the preceding month. Decreases recorded in four of the ten component time series outweighed the increases recorded in the remaining six that were available for December 2011. The major negative contributors to the movement in the leading indicator in December were the twelve-month percentage change in job advertisement space and the twelve-month percentage change in the composite leading business cycle indicator of South Africa’s major trading-partner countries. The largest positive contribution came from the number of residential building plans approved, followed by the twelve-month percentage change in the number of passenger vehicles sold. (more...)
• 20 Feb. Nedbank Weekly Economic Monitor: Review of 13 to 17 February and preview of 20 to 24 February 2012. The rand firmed at the end of the week on higher precious metal prices and improved risk appetite. Retail sales rose by stronger than expected 8,7 % y-o-y in December. Moody's has downgraded some Eurozone sovereigns as the outlook for the currency area remains uncertain. The Eurozone economy contracted by 0,3 % q-o-q in the fourth quarter, with Germany's economy declining by 0,2 %. UK inflation dropped further as the effects of the VAT increase were fully accounted for. (more...)
• 20 Feb. Absa: SA Morning Sheet. This is a daily economic comment ... The sheets can be downloaded daily from Absa Economic Research An extract fro today's sheet is provided as an example: After two relatively light weeks of domestic data and events, this week will prove critical for South Africa’s markets with the release of consumer and producer price inflation data, and the tabling of the country’s National Budget. We look for CPI to continue its upward trajectory in January, rising to 6.2% y/y from 6.1% in December. Underpinning our forecast is a further increase in food prices and quarterly price surveys in insurance and funeral costs. These should more than offset our projected m/m fall in the transport component owing to some respite at the fuel price pumps and still lacklustre growth in vehicle price inflation. We forecast PPI to have moderated slightly in January to 9.6% y/y (9.8% prior) given our observation of a lower PMI price index, lower global oil prices and a stronger currency in January. (more...)
• 15 Feb. Nedbank Economic Commentary: Retail sales. Retail sales came out stronger than expected in December. Annual growth in retail sales accelerated to 8,7 % in December from an upwardly revised 7,2 % in November (previously 6,8 %), against the consensus forecast of a slowdown to 6,5 %. All the major categories of retail sales recorded strong growth on a year-on-year basis, but significant contributions came from the 'textiles, clothing, footwear and leather goods' and 'other retailers' categories, where sales rose by 11,3 % y-o-y and 10,9 % respectively. Over the month, total sales rose by 1,3 % on a seasonally adjusted basis and were up by 2,5 %q-o-q during the last quarter of 2011. In 2011 as a whole, retail sales rose by 6,1 %, up from 5,1 % in 2010. (more...)
• 13 Feb. Nedbank Weekly Economic Monitor: Review of 6 to 10 February and preview of 13 to 17 February 2012. The rand came under late pressure from a weaker euro and uncertainty following news that the South African president would make an announcement of national importance on Saturday. Manufacturing activity remained subdued in December, with production growing by 2,4 % y-o-y. The unemployment rate fell to 23,9 % in the final quarter of 2011 from 25 % in the third quarter. Greek parliament passed another austerity package but bailout funds are not likely to be released immediately. Both the ECB and the BoE left their key interest rates unchanged, with the latter expanding its asset purchase programme. (more...)
• 10 Feb. Nedbank Economic Commentary: Manufacturing production. Manufacturing activity remained subdued in December. Manufacturing production fell by a seasonally adjusted 1,3% m-o-m in December, containing the annual increase to 2,4% from an upwardly revised 2,8% in November. The market expected production to increase by 2,6% y-o-y. The subdued annual increase was mainly due to higher production in the following broad industries: ‘basic iron and steel, non-ferrous metals, metal products and machinery’, ‘petroleum, chemicals, rubber and plastics’ as well as ‘wood, paper, printing and publishing’. In the fourth quarter, manufacturing production rose by a seasonally adjusted 1% q-oq and by 2,1% y-o-y. The stronger manufacturing and mining production figures are likely to translate into seasonally adjusted annualised gdp growth of around 4% q-o-q in the fourth quarter, taking gdp growth for 2011 to 3,2%. In 2011 as a whole, manufacturing output grew by 2,5%, after rising by 5% in 2010. (more...)
• 09 Feb. Nedbank Economic Commentary: Mining production. Some rebound in December but levels remain weak. Mining production rose by 3,5% m-o-m on a seasonally adjusted basis in December, taking output growth to 0,9% y-o-y after a 4,4% contraction was recorded in November. For the fourth quarter, total mining production rose by a seasonally adjusted and annualised 1,7% q-o-q, but was down by 5,1% y-o-y. Non-gold output rose by 2,2% y-o-y after falling by 4,4% in the previous month, while gold production remained under pressure, contracting by 8,2% y-o-y in December, its eighth consecutive monthly decline. Total mining production is likely to remain weak in the coming months, constrained by poor growth prospects globally and domestic factors. (more...)
• 07 Feb. House price growth remains low and is slowing down. The slowdown in nominal year-on-year house price growth, evident towards the end of 2011, continued in January 2012. On a monthly basis nominal price growth remained in negative territory up to the first month of the year. In real terms, i.e. after adjustment for the effect of inflation, house prices deflated further up to December last year against the backdrop of a consumer price inflation rate of 6,1 year-on-year (y/y) at year-end. The slowdown in the pace of house price growth can be attributed to the combined effect of the following factors, which affect consumers and eventually impact housing demand, growth in mortgage finance and house price trends: (more...)
• 06 Feb. Nedbank Weekly Economic Monitor: Review of 30 January to 3 February and preview of 06 to 10 February 2012. The rand was supported by increased risk appetite. Total vehicle sales rose by 7,0 % y-o-y in January, mainly due to stronger passenger vehicle sales, which recorded the highest sales figure for January in five years. The trade account recorded a surplus of R4,7billion in December following a R8billion deficit in November. Global equity markets were boosted by better-than-expected earnings reports and strong US jobs data. Manufacturing activity picked up steam across the globe with key countries' PMIs rising in January. The US labour market showed signs of continued improvement in January, with non-farm payrolls rising faster than market expectations. In the Eurozone the unemployment rate remained high in December. (more...)
• 06 Feb. Absa: SA Morning Sheet. This is a daily economic comment ... The sheets can be downloaded daily from Absa Economic Research An extract fro today's sheet is provided as an example: It is another relatively busy week on the local data front, kicking off with the release of the SA Reserve Bank’s gross gold and foreign exchange reserve position and labour market figures on Tuesday, followed by mining and manufacturing production data on Thursday. We lie at the higher end of Bloomberg consensus forecasts (cf. USD49.2bn) in expecting gross reserves to have ticked up to USD51.3bn in January from USD48.bn in December. The USD1.5bn 12-year global bond issued by National Treasury on 9 January is likely to account for the bulk of the uptick, while a strong rebound in the USD gold price and a weaker dollar against the majors in the month are likely to have also added to gross reserves. Although we have seen significant strength in the rand in the opening weeks of 2012 (the ZAR remains one of the best performing EM currencies YTD), a still concerning domestic inflation trajectory and uncertain global backdrop is likely to have resulted in relatively limited FX intervention by authorities, in our view. (more...)
• 06 Feb. Barclays puts the squeeze on Absa. Absa group chief executive Maria Ramos is finding out the hard way what it is like to be bound to the bank's global parent, Barclays, which is facing its own hardships. When Ramos delivers Absa's full year results next Friday she will boast an earnings increase of between 18% to 22% for the year ended December 2011, a positive sign for a bank that has been losing market in some areas such as mortgage lending. At the same time, in London, Barclays' group chief executive Bob Diamond will reiterate the tough global trading conditions and the stresses of the continuing regulatory and cost pressures of the British-headquartered bank. Barclays reported a 33% fall in pre-tax profits of £2.6-billion for the first six months of 2011 and the retrenchment of about 2 000 staff. It is likely to report some improvement, say analysts, but probably it will be marginal. (more...)
• 02 Feb. Manufacturing outlook turns corner as PMI shows expansion. The outlook for manufacturing has unexpectedly leapt into positive territory. Data out yesterday showed the seasonally adjusted Kagiso purchasing managers index (PMI) rebounded strongly to 53.2 last month from 49.4 in December. This is the highest level since June last year and above the 2011 average of 52.1. The index, a critical measure of manufacturing activity, is compiled each month by the Bureau for Economic Research at the University of Stellenbosch, in collaboration with the Institute for Purchasing and Supply SA. It is based on surveys of purchasing managers in the manufacturing sector. A level above 50 implies factory output is expanding. (more...)
• 01 Feb. Nedbank Economic Commentary: Trade data. A large trade surplus was recorded in December following two months of large deficits. The trade account recorded a surplus of R4,7 billion in December following a R8 billion deficit in November. Imports fell sharply by 23,8% over the month, while exports were down by 8%. On a year on year basis, exports rose by 33,7% and imports by 16,8%. Almost all categories of imports contracted over the month, with the sharpest declines recorded in imports of mineral products (down by 23,5%), electrical equipment (down by 25,1%) as well as vehicles and equipment (down by 6,3%). Most categories of exports also declined in December, with mineral products, precious metals and stones as well as base metals recording sharpest drops. (more...)
• 31 Jan. Nedbank Economic Commentary: Money supply and credit. Credit rises by more than expected but still modest. Broad money supply growth rose to 8,2% y-o-y in December from 7,2% in November and against the market consensus of 7,6%. Growth in private sector credit extension was unchanged at 6,2% y-o-y, higher than the market consensus of 5,9%. Credit to households rose by 1,4% m-o-m and 6,7% y-o-y, while corporate credit rose by 0,9% m-o-m and 8,4% y-o-y. Growth in asset-backed credit was slow at 3,4% y-o-y from 2,7% in the previous month. However, instalment sales and leasing finance has accelerated, rising by 1,4% m-o-m and 7,0% y-o-y. Mortgage finance edged higher, expanding by 2,5% y-o-y. (more...)
• 31 Jan. Nedbank Weekly Economic Monitor: Review of 23 to 27 and preview of 30 January to 3 February 2012. Global equity markets were generally firmer. The FOMC has indicated that it is likely to maintain its accommodative monetary policy stance until well into 2014. US economic growth picked up in the fourth quarter, boosted mainly by an inventory accumulation. The rand improved further for the third consecutive week. Producer inflation for December come out lower than expected eased, easing to 9,8% from 10,1% in November. (more...)
• 30 Jan. Absa: SA Morning Sheet. This is a daily economic comment ... The sheets can be downloaded daily from Absa Economic Research An extract fro today's sheet is provided as an example: A host of smaller but nevertheless important data releases is scheduled for South Africa this week, kicking off with the release of private sector credit extension (PSCE) and trade balance figures on Tuesday; PMI numbers on Wednesday and NAAMSA new vehicle sales statistics on Thursday. We are marginally lower than Bloomberg consensus forecasts (cf. 5.9%) in expecting PSCE growth to have moderated to 5.8% y/y in December following the prior month’s 6.2% growth print. Despite the headline moderation, we still expect m/m growth in total credit extension to have risen 0.4% given consumer spending into the festive season. Unfortunately, we do not expect growth in household credit to be driven through the more durable components of credit (mortgage advances etc), but rather a further pickup in smaller and unsecured components such as credit cards, store cards and personal loans, etc. (more...)
• 26 Jan. Nedbank Economic Commentary: Producer inflation. Producer inflation surprised on the downside in December. Producer inflation eased further to 9,8% y-o-y in December from 10,1% in November, against consensus forecast for it to remain unchanged. Over the month, overall producer prices were steady. Food prices increased further, rising by 2,7% at agricultural level and 1,7% at manufacturing level. However, that was countered by lower commodity process, with mining and quarrying costs falling by 3,7% m-o-m, mainly on the back of a decline in coal prices. (more...)
• 26 Jan. A survey finds 37% of privately held business owners in South Africa cite red tape as their chief constraint, followed by a lack of a skilled workforce, at 36%. Overregulation and red tape are the biggest constraints to business expansion in SA, according to a survey by accounting, audit and advisory firm Grant Thornton. The survey was based on the views of CEOs, chairmen and business owners in the fourth quarter of last year. Red tape was now as pervasive a problem in SA as in other Brics (Brazil, Russia, India, China and SA) countries, Grant Thornton Durban managing partner Deepak Nagar said yesterday. (more...)
• 24 Jan. Composite business cycle indicators for South Africa. The composite leading business cycle indicator increased by 0,6 per cent in November 2011 compared with the preceding month. Six of the eleven component time series that were available for November 2011 increased, while five decreased. The major positive contributors to the movement in the leading indicator in November were the BER’s average hours worked per factory worker in the manufacturing sector and the number of residential building plans passed. The largest negative contribution came from the twelve-month percentage change in the composite leading business cycle indicator of South Africa’s major trading-partner countries, followed by the twelve-month percentage change in the number of passenger vehicles sold. (more...)
• 24 Jan. Nedbank Weekly Economic Monitor: Review of 16 to 20 and preview of 23 to 27 January 2012. Equity markets were firmer on positive earnings reports and increased optimism about the Eurozone. Chinese economic growth slowed in the fourth quarter, tempering worries about a possible hard landing for the world’s second largest economy. The rand remained firmer on low risk aversion. The MPC kept the repo rate unchanged at 5,5% Consumer inflation was steady at 6,1% in December 2011. Domestic The rand remained firm last week, supported by lower risk aversion, a firmer euro as well as the South African Reserve Bank Monetary Policy Committee (MPC’s) decision to keep interest rates unchanged, with the governor indicating that the committee did not discuss cutting rates. For the first time since mid November 2011, the local unit breached the R7 level against the US dollar on Wednesday and ended the week at R7,94, up from R8,12 at the previous week’s close. The unit also strengthened to R10,27 and R12,37 against the euro and the British pound respectively from R10,30 and R12,45 over the week. (more...)
• 23 Jan. Absa: SA Morning Sheet. This is a daily economic comment ... The sheets can be downloaded daily from Absa Economic Research An extract fro today's sheet is provided as an example: It is a relatively quiet week on the domestic data calendar with the release of producer price inflation figures on Thursday likely to be the main focus for the local market. Although we expect headline PPI growth to have slowed further to 9.9% y/y in December from 10.1% the prior month, our forecast still translates into a 0.1% m/m uptick in factory gate prices. (more...)
• 19 Jan. Nedbank Economic Commentary: Retail sales. Retail sales growth eased but remained firm in November. Retail sales growth momentum remained firm in November, with total sales rising by 6,8% y-o-y from a revised 7,5% (previously 7,4%) in October. Sales fell by a seasonally adjusted 0,3% m-o-m. Strong sales growth of ‘household furniture, appliances and equipment’, ‘hardware, paint and glass’ as well as ‘textiles, clothing, footwear and leather goods’ remained the key drivers. While sales are expected to have picked in December for seasonal reasons, the underlying trend will probably start to soften due to high inflation eating into disposable incomes. However growth is still expected to be reasonable due to low interest rates. (more...)
• 18 Jan. Nedbank Economic Commentary: Consumer Inflation. Consumer inflation holds steady in December 2011. Consumer inflation was steady in December 2011 at 0,2 % m-o-m and 6,1 % y-o-y, slightly better than market expectations of 6,2 %. Consumer inflation was 5 % in 2011 as a whole, up from 4,3 % in 2010. Inflation is expected to remain elevated off a low base, hovering above the Reserve Bank's upper 6 % limit for much of 2012. The upward pressure will mainly come from a weaker rand combined with further increases in food, fuel and administrative prices. However, subdued domestic spending and excess production capacity should help prevent any significant secondary inflationary effects from developing by limiting retailers' pricing power. (more...)
• 18 Jan. Nedbank Economic Commentary: Mining production. Mining production improved in November. Total output rose by a seasonally adjusted 11,2% m-o-m, (the strongest growth rate since April 2008), mainly pushed up by production of platinum group metals, which rose by 23,4% m-o-m, off the previous month’s low base when it dropped by 19,4%. On an annual basis, total production fell by 4,6% y-o-y, with the rate of decline improving from the 12% drop recorded in October. Gold production declined by 4,5% y-o-y, while non gold production was down by 4,6% y-o-y. Total mining production is likely to remain weak in the months a head, constrained by poor growth prospects both locally and globally. (more...)
• 17 Jan. Nedbank Weekly Economic Monitor: Review of 9 to 13 and preview of 16 to 20 January 2012. The rand closed the week under pressure following news that Fitch had revised South Africa’s rating outlook from stable to negative. Manufacturing production improved to 2,6% y-o-y in November from 1,2% in October. Standard & Poor’s revised the sovereign credit ratings of 16 Eurozone members, with Austria and France losing their AAA ratings. Both the BoE and the ECB left their policy interest rates unchanged. US data indicated that slower global growth and weak domestic sales are impacting on the economy. (more...)
• 16 Jan. Absa: SA Morning Sheet. This is a daily economic comment ... The sheets can be downloaded daily from Absa Economic Research It is a busy week on the South African economic calendar with a slew of data releases and events scheduled. We expect the release of consumer price inflation figures on Wednesday to show CPI remains on an upward trajectory, rising 6.2% y/y in December from 6.1% previously (consensus estimates look for 6.3%). Further upward pressure in food prices together with quarterly surveys in the housing component (OER) are expected to be the main drivers here. Excluding food, fuel and energy, we expect core inflation to measure 4.0% y/y from 3.9% y/y previously. We reiterate our view that underlying inflation is picking up and as such, we expect core inflation to end the year at 5.5%. We expect CPI to remain above the 6% target ceiling until Q2 13. (more...)
• 13 Jan. Nedbank Economic Commentary: Manufacturing production. Manufacturing output improved slightly in November. Manufacturing production improved slightly in November, but underlying conditions remained weak. Output rose by a seasonally adjusted 2,9% m-o-m and by 2,6% y-o-y, up from 1,2% y-o-y in October and slightly above market expectations of 2,3% annual growth. The improvement was mainly due to higher production of food and beverage products, wood processing, various metal products and electrical machinery. In contrast, production of motor vehicles, parts and accessories and other transport equipment was 12,6% below levels recorded in the same month the year before. (more...)
• 12 Jan. 2011 saw low nominal house price growth, with prices deflating in real terms. Relatively low nominal year-on-year house price growth was recorded in 2011, while in real terms, prices dropped last year compared with 2010. On a monthly basis price growth slowed down or was in negative territory towards the end of the year. These trends are based on the Absa house price indices for small, medium-sized and large homes in the middle-segment of the South African housing market for which the bank received and approved applications for mortgage finance (see explanatory notes). (more...)
• 10 Jan. Nedbank Weekly Economic Monitor: Review of 12 December 2011 to 13 January 2012 and preview of 9 to 13 January 2012. Global equities were generally firmer last week after ending 2011 on a weak note. Local consumer inflation came in below market expectations in November, increasing to 6,1% y-o-y up from 6% y-o-y in October. Broad money supply growth grew at an annual rate of 7,2% and by 1,5% in November. Private sector credit extension rose by 6,2% y-o-y in November from 5,5% in October. The trade deficit remained unexpectedly high at R8,04 billion in November following October’s large shortfall of R9,58 billion. (more...)
• 09 Jan. Absa: SA Morning Sheet. This is a daily economic comment ... The sheets can be downloaded daily from Absa Economic Research An extract fro today's sheet is provided as an example: It is a slightly busier week on the South African data calendar, kicking off with the release of the SA Reserve Bank’s gold and foreign exchange reserve position this morning (8:00am SA time). A weaker EUR during December together with the gold price falling almost 10% during the month means December gross reserves are likely to have declined – consensus expects a drop of about ZAR900mn , to ZAR48.8bn). (more...)
• 06 Jan. Cosatu laments 'white, capitalist-owned' JSE. More than 80% of the JSE is accounted for by the large banks and the few companies in the traditional sectors: mining and energy, the Congress of South African Trade Unions (Cosatu) has said. "All these companies are white, private, and capitalist-owned and they are increasingly being foreign-owned," Cosatu president Sdumo Dlamini said in his comments on the 100th anniversary of the ruling ANC, of which the union federation is an ally. (more...)
• 05 Jan. US-based law firm, Dewey & LeBoeuf has snatched two leading teams of lawyers from Werksmans in preparation for a surge in economic activity in South Africa. The US-based law firm, Dewey & LeBoeuf, has snatched leading teams of lawyers from Werksmans Attorneys, a local firm, as the American group prepares for a surge in economic activity in SA and further afield in Africa. The US firm, which has an office in Johannesburg, focuses on energy projects but plans to branch into infrastructure development, capital markets and mining activities. One team is headed by Morne van der Merwe, who led Werksmans’ mining and resources practice; the other by Wildu du Plessis, former head of the local firm’s banking, finance and capital markets business. They take their entire teams with them. (more...)
• 30 Dec. Nedbank Economic Commentary: Money supply and credit. Credit demand growth just keeping pace with inflation. Credit demand continued to expand roughly in line with inflation in November. The 6,2 % annual increase was slightly above the consensus expectation of 6,1 %, but remains very modest for this point in the business cycle. Money supply growth of 7,2 % was marginally below our own and the market's expectations. Credit extended to households rose by 5,4 % y-o-y from 5,3 %, while credit extended to companies eased to 6,8 % from 7,0 %. Categories that continued to do relatively well were instalment sales and leasing finance (up 6,0 %) and unsecured credit (up 12,6 % and driven mainly by personal loans). In contrast, mortgage advances rose by just 1,9 %, reflecting the weak housing market and banks' reluctance to extend long-term loans given higher liquidity costs. (more...)
• 30 Dec. Nedbank Economic Commentary: Trade data November 2011. The trade deficit remained unexpectedly high in November. November's trade deficit remained high at R8,04 billion from October's exceptionally large R9,58 billion shortfall. The November deficit was expected to narrow for seasonal reasons as imports normally start to ease in the month following earlier festive season pre-buying. Imports rose by 8,1 % in the month and were up over 47 % on the previous November. The main contributors to the monthly increase were sharp rises in imports of mineral products (mainly oil, up 21 %) and in machinery and electrical appliances (up 12 %). (more...)
• 27 Dec. Emerging-market currencies have taken a pounding this year, reflecting concern over the global economy and Europe's inability to find a long-term solution to its sovereign debt crisis, with the rand shedding 28% in value against the dollar this year. Analysts say that for as long as jitters over Europe continue to bog down investors, who will scurry towards safe-haven assets such as US Treasuries, the rand could remain under pressure. In spite of this, the fundamentals support a stronger rand. (more...)
• 27 Dec. Global economies would rather forget 2011: the euro zone and the US economies reeled from crisis to crisis, and while many businesses closed their doors for good this year in SA and unemployment is high, there is evidence of an upturn in retailing. Paul Kent, managing director of SureSwipe, an independent credit and debit card swipe machine distributor, has a unique overview of retail and professional market trends (the company also serves the medical profession). (more...)
• 21 Dec. IMF Managing Director Christine Lagarde to Visit South Africa. Ms. Christine Lagarde, Managing Director of the International Monetary Fund (IMF), will visit South Africa from January 5-7, 2012. Ms. Lagarde will meet with the Presidency, the key economic ministers, as well as the Reserve Bank Governor, to discuss the challenges facing African countries and emerging markets more generally. (more...)
• 20 Dec. Postbank has moved the submission of its banking licence to the Reserve Bank to early next year, but hopes to start operating as a fully fledged bank by the third quarter of 2012. Postbank has moved the submission of its banking licence to the Reserve Bank to early next year, but hopes to start operating as a fully fledged bank by the third quarter of 2012. In August, former communications minister Roy Padayachie said he was confident Postbank would lodge its application for a licence by the end of this month. (more...)
• 20 Dec. Composite business cycle indicators for South Africa. The composite leading business cycle indicator increased by 0,3 per cent in October 2011 compared with the preceding month. Seven of the eleven component time series that were available for October 2011 increased, while four decreased. The major positive contributors to the movement in the leading indicator in October were the twelve-month percentage change in job advertisement space and the BER’s average hours worked in the manufacturing sector. The largest negative contribution came from the twelve-month percentage change in the export commodity price index, followed by the number of residential building plans passed. (more...)
• 19 Dec. Absa: SA Morning Sheet. This is a daily economic comment ... The sheets can be downloaded daily from Absa Economic Research An extract from Friday's sheet is provided as an example: Please note that this will be the last South Africa Morning Sheet for 2011, publication will resume in early January. Headline CPI inflation rose to a lower-than-expected 6.1% y/y in November from 6.0% in October. We looked for inflation to accelerate to 6.3% y/y. On a m/m basis, the CPI increased 0.3%. Food inflation rose slightly in November (to 11.1% y/y from 11.0% y/y). Anecdotal price evidence in food retail stores suggests that further upside is likely to CPI food in December. We expect food inflation to continue its upward trajectory to a peak of 15.0% y/y in Q2 12. While food inflation was largely in line with what we expected, the surprise to our forecast stemmed mostly from a lower-than-expected print for transport inflation. While the 23-cent/litre petrol price rise certainly drove private transport operation prices 1.8% m/m higher, prices in the vehicles and public transport categories remained flat, against our expectation for a slight rise. (more...)
• 19 Dec. Millions spent on luxury flights despite pleas from Finance Minister Pravin Gordhan for belt-tightening. Finance Minister Pravin Gordhan’s pleas for austerity in government spending have fallen on deaf ears among his Cabinet colleagues and some public institutions. A flood of ministerial replies to written parliamentary questions last week shows many millions have been spent on luxury travel and accommodation when even slightly more modest choices would have saved the taxpayer a fortune. The replies triggered complaints from opposition parties that the spending was profligate and in contempt of the poor of the country. (more...)
• 15 Dec. Nedbank Economic Commentary: Producer Price Inflation. Producer inflation eases to 10,1% in November. Producer inflation eased to 10,1% y-o-y in November, down from 10,6% y-o-y in October. The market had expected producer inflation to remain unchanged. Year-onyear increases in commodity prices and beneficiated metal products remain the main drivers of producer inflation. Lower commodity prices as well as weakening demand, both locally and abroad, should contain producer price inflation during 2012. However, a key risk comes from the rand, which has weakened steadily in recent months. If the currency continues to depreciate, producer inflation will remain firmly in double-digit territory next year. (more...)
• 15 Dec. Nedbank Economic Commentary: Consumer Inflation November 2011. Consumer inflation rises to 6,1%. Consumer inflation came out slightly lower than market expectations in November, increasing to 6,1% y-o-y from 6% y-o-y in October. The market had expected consumer inflation to rise to 6,2%. Inflation is expected to continue its upward trend in the coming months, rising off the low base established this time last year. Higher food and administered prices will remain the main drivers of inflation. The rand will be the wildcard over the coming months. If a credible plan is not found to resolve the European debt crisis, the rand could fall steeply as investors seek the security of safe-haven assets. (more...)
• 14 Dec. Nedbank Weekly Economic Monitor: Review of 5 to 9 and preview of 12 to 16 December 2011. This is the last Weekly Economic Monitor for 2011, and we would like to take this opportunity to wish all our readers a joyous festive season. The next Monitor will be released on 9 January 2011. Global equity markets were mixed last week, following the previous week’s strong rally The current account deficit widened to 3,8% of gdp in the third quarter from 2,9% in the second quarter, mainly due a narrower trade surplus. Growth in gross domestic expenditure accelerated to a seasonally adjusted and annualised 4,2% in the third quarter from 1,1% in the second quarter. Manufacturing production slowed to a dismal 1% y-o-y in October, down from 8,1% in September. The Bank of England kept the interest rate unchanged at a record low of 0,5%. (more...)
• 12 Dec. Absa: SA Morning Sheet. This is a daily economic comment ... The sheets can be downloaded daily from Absa Economic Research An extract from today's sheet is provided as an example: It is a quieter week on the South African data calendar with consumer and producer prices for November the key focus. In a low survey month we look for food and fuel to contribute the most to the 0.4% m/m rise we are forecasting for November headline CPI (released on Wednesday). A 23 cents/litre petrol price increase during the month should push the transport category 0.9% m/m higher while continued price pressures in food should result in an increase of around 1.1% m/m. Together, this would leave CPI food at 11.1% y/y and CPI transport at 7.4% y/y. Aside from food and transport, we are looking for a slight uptick in core inflation to 4.0% y/y after tracking sideways at 3.8% for the past three months. Our work on underlying inflation suggests that it is just a matter of time before core inflation starts to pick up and considering robust consumer metrics as of late, this should not come as a surprise. (more...)
• 08 Dec. Nedbank Economic Commentary: Mining production. Mining production activity remained weak in October. Mining production fell sharply in October, with total output contracting by 12,7% y-o-y, after declining by 5,4% y-o-y in September. On a seasonally adjusted basis output fell by 8,1% m-o-m. Platinum group metals (PGM’s) fell by 27,3% y-o-y, and fell by 18,9% over the month. PGM’s make up 27% of total mining output – the largest category. The outlook for the mining sector remains weak, constrained by poor global growth prospects as well as domestic constraints. The rand remains relatively firm despite its recent bout of weakness and it is not likely to boost export competitiveness considerably, while logistical problems, particularly with transport and energy capacity continue to hurt the sector. (more...)
• 08 Dec. House price growth slowing down. Latest trends House price growth appears to be slowing down again, as was the case earlier this year. This is based on the latest trends in the Absa house price indices for small, medium-sized and large homes in the middle-segment of the South African housing market for which the bank received and approved applications for mortgage finance (see explanatory notes). The recent developments with regard to nominal house price growth came against the backdrop of slowing or declining price trends on a monthly basis in the various categories of housing over the past few months, which were expected to eventually lead to a slowdown in year-on-year price growth at a later stage. (more...)
• 29 Nov. Nedbank Economic Commentary: Gross Domestic Product - Q3 2011. Real gdp growth remained subdued in the third quarter. Real gdp growth disappointed in the third quarter, growing at a subdued annualised pace of only 1,4 % q-o-q, up slightly from 1,3 % in the second quarter, but below market expectations of a 1,8 % increase. The downward pressure mainly came from lower agriculture, mining and manufacturing production. In contrast, activity in the services sectors was generally stronger than expected, supported by strong consumer spending and increased trade on the financial markets. (more...)
• 28 Nov. Nedbank Weekly Economic Monitor: Review of 21 to 25 November and preview of 28 November to 2 December 2011. Global equities remained weak on worries about global growth and European debt problems. The rand fell to its lowest level since April 2009 on heightened risk aversion. Consumer inflation gathered momentum in October, increasing to 6 % y-o-y up from 5,7 % y-o-y in September. The US' third quarter gdp growth was revised downwards to an annualised 2 % q-o-q, compared with an initial estimate of 2,5 %. UK gdp grew more than expected in the third quarter, expanding by 0,5 % q-o-q, up from 0,2 % in the second quarter. (more...)
• 28 Nov. Absa: SA Morning Sheet. This is a daily economic comment ... The sheets can be downloaded daily from Absa Economic Research An extract from today's sheet is provided as an example: In a busy week on the South African data calendar, the focus for markets will likely be on the release of production-side GDP figures on Tuesday. A stronger-than-expected quarter for manufacturing and retail sales leaves us expecting Q3 GDP to rise 1.8% q/q saar versus 1.3% in Q2, broadly in line with Bloomberg consensus. The “two-speed” nature of SA’s economic growth trajectory, however, should remain clearly evident where we expect the mining sector likely remained the largest drag on Q3 GDP growth after production growth fell 18.9% q/q saar in Q3. (more...)
• 25 Nov. Nedbank Economic Commentary: Producer inflation. Producer inflation rises to 10,6% in October. Producer inflation increased to 10,6% y-o-y, up from 10,5% y-o-y in September. The market had expected an increase to 11% y-o-y. Year-on-year increases in commodity prices and beneficiated metal products remain the main drivers of producer inflation. Producer inflation is expected to edge up further over the coming months, but lower commodity prices as well as subdued global growth are expected to put downward pressure on prices next year. The rand will remain the wildcard over the coming months. If a workable plan is not found to resolve the European debt crisis, the rand could fall further as investors seek the security of so called safe-haven assets. A sharply weaker currency would quickly filter through into the domestic economy via higher rand-denominated commodity prices and other imported equipment. (more...)
• 23 Nov. Nedbank Economic Commentary: Consumer Inflation October 2011. Consumer inflation rises to 6%. Consumer inflation came out higher than market expectations in October, increasing to 6% y-o-y from 5,7% y-o-y in September. The market had expected consumer inflation to rise to 5,9% in October. Inflation is expected to continue its upward trend in the coming months, rising off the low base established this time last year. Higher food and administered prices will remain the main drivers of inflation. The rand will be the wildcard over the coming months. If a credible plan is not found to resolve the European debt crisis, the rand could fall steeply as investors seek the security of so called safe-haven assets. (more...)
• 23 Nov. Composite business cycle indicators for South Africa. The composite leading business cycle indicator decreased by 0,3 per cent in September 2011 compared with the preceding month. Five of the ten component time series that were available for September 2011 decreased, while five increased. The major negative contributors to the movement in the leading indicator in September were the number of residential building plans passed and the twelve-month percentage change in the composite leading business cycle indicator of South Africa’s major trading-partner countries. The largest positive contribution came from the twelve-month percentage change in the number of new passenger vehicles sold, followed by the prices of all classes of shares traded on the JSE. (more...)
• 23 Nov. Graft worsens in southern Africa, says Transparency International. Global civil society group opposing corruption finds many instances of bribes being paid to public service providers across six countries, including South Africa. Corruption is getting worse in Southern Africa, with the police seen as the most corrupt, and most people pay bribes for public services, a new survey of six countries in the region by Transparency International reveals. (more...)
• 14 Nov. Absa: SA Morning Sheet. This is a daily economic comment ... The sheets can be downloaded daily from Absa Economic Research An extract fro today's sheet is provided as an example: In a relatively quiet week on the South African data calendar, the focus turns to the demand-side of the economy with the release of retail sales figures for September on Wednesday. We are broadly in line with Bloomberg consensus (cf. 6.5% y/y) in looking for headline growth to have moderated to 6.4% y/y from 7.1% in August. Despite the expected moderation, we believe that growth in line with consensus is still respectable in the current economic climate and continues to reflect the supportive climate for consumption, provided by low interest rates, high nominal income levels and manageable inflation. (more...)
• 14 Nov. The DA says its diagnostic assessment has identified 12 impediments to growth which, if addressed, will enable SA to emulate Brazil’s dazzling performance in creating jobs and reducing poverty. The African National Congress (ANC)-led government lacked the political will to drive an ambitious growth agenda, the Democratic Alliance said yesterday when releasing the first phase of a policy formulation project which it believed would get SA to an 8% growth rate. The party has undertaken its own analysis of the bottlenecks to growth ahead of the release today by National Planning Minister Trevor Manuel of the government’s national plan to 2030. The DA’s diagnostic assessment identified 12 impediments to growth which, if addressed, would enable SA to emulate Brazil’s dazzling performance in creating jobs and reducing poverty, it said. (more...)
• 14 Nov. Nedbank Weekly Economic Monitor: Review of 7 to 11 and preview of 14 to 18 November 2011. Global equity markets closed the week mixed, with new economic reforms adopted by Italy’s senate contained worries about the eurozones debt problems. In line with expectations, the Reserve Bank’s Monetary Policy Committee (MPC) kept the repo rate unchanged at 5,5%. Manufacturing output improved further in September, rising by 7,7% y-o-y from 5,9% in the previous month, while the weakness in mining production persisted during September, with total output falling 5,4% y-o-y. In the US, initial jobless claims fell to their lowest level in seven months, a sign that companies may be scaling back retrenchments. (more...)
• 11 Nov. Mining production activity remained weak in September. Mining production activity remained weak in September, with total output contracting by 5,4% y-o-y from a revised 4,2% decline (previously down by 3,4%) in August. On a seasonally adjusted basis output fell by 2,4% m-o-m. Gold output fell by 9,0% y-o-y, while non-gold output was down by 5,1%. For the third quarter, total mining production contracted by 5,0% q-o-q after contracting by 1,1% in the first quarter. The mining sector still faces bleak short-term prospects. Global commodity prices remained depressed over the past month while the outlook for the global economy remains uncertain, which could drag prices down further. (more...)
• 09 Nov. Nedbank Economic Commentary: Manufacturing production - September 2011. Manufacturing continues to rebound from the mid-year slump. Manufacturing output improved further in September, rising by 7,7 % y-o-y from a revised 5,9 % (previously 5,6 %) in August. However, this figure reflected the continuing rebound from the strike-driven plunge in production during the second quarter. On a seasonally adjusted basis manufacturing output increased by 0,2 % m-o-m and was up by only 0,1 % in the three months to September compared to the same period to August. The outlook for manufacturing activity still remains uncertain. Global demand conditions remain fragile. Output in industries that supply to the local market will be contained by slower domestic spending - on fragile confidence - as well as the slow recovery in fixed investment activity and weakness in the building and construction industries. (more...)
• 07 Nov. Absa: SA Morning Sheet. This is a daily economic comment ... The sheets can be downloaded daily from Absa Economic Research An extract fro today's sheet is provided as an example: In a relatively busy week, all eyes are likely to be on the SA Reserve Bank’s MPC meeting and interest rate decision on Thursday. Though we do not expect a downgrade to the SARB’s growth forecasts since its last MPC meeting, we would expect the MPC to continue to voice its concerns surrounding the developments in Europe. We believe there is a risk that the SARB lifts its inflation forecasts, given the weakness in the currency over the past few months and the little commodity price respite. Given all of the above, we view the chance of a rate cut as unlikely in the current environment. We therefore look for the MPC to keep the policy rate on hold this week at 5.5%. (more...)
• 07 Nov. Nedbank Weekly Economic Monitor: Review of 31 October to 4 November and preview of 7 to 11 November 2011. Global equity markets were depressed by uncertainty over the Greek debt situation. A strong rise in exports pushed the South African trade account into a surplus of R2,5 billion in September following a R3,7 billion deficit in the previous month. The unemployment rate declined slightly to 25% in the third quarter from 25,7% in the second quarter. Vehicle sales remained firm at 18,9% y-o-y in October although the growth rate has moderated from 30,0% in the previous month. (more...)
• 07 Nov. House price growth appears to be peaking. Latest trends. According to Absa’s calculations, the nominal value of homes in the medium-sized (building area of 141m²-200m²) and large (building area of 221m²-400m²) categories of the South African housing market improved further in October 2011 compared with a year ago. House prices in the small segment (building area of 80m²-140m²) continued to contract on a year-on-year basis, mainly as a result of base effects. However, year-on-year price changes appear to be peaking in all three the abovementioned categories of housing, which are related to slowing or declining price trends on a monthly basis since earlier this year. (more...)
• 04 Nov. Nationalisation won't solve problems. Nationalisation won't solve SA's problems of low growth and high unemployment, economist Vivan Atud told the Free Market Foundation on Thursday. Atud was delivering a paper in which she examined the nationalisation that had taken place in the 12 countries currently being investigated by the ruling ANC's task team on nationalisation - Chile, Norway, Sweden, Finland, Zambia, Brazil, Venezuela, Namibia, Botswana, Malaysia, China and Australia. (more...)
• 01 Nov. Nedbank Weekly Economic Monitor: Review of 24 to 28 October and preview of 31 October to 4 November 2011. Global equity markets gained on news that European leaders have reached an agreement that will help to resolve the European debt crisis. National Treasury has revised fiscal deficit forecasts higher to 5,5% (from 5,3%) for 2011/12, 5,2% (4,8%) for 2012/13, 4,5% (3,8%) for 2013/14 and forecast 3,3% for 2014/15. Private sector credit extension for September came out weaker than expected, easing to 5,5% y-o-y from 6,1 % y-o-y in August. (more...)
• 01 Nov. Nedbank Economic Commentary: Trade data. Strong export growth pushes the trade account into surplus. A strong rise in exports pushed the trade account to a R2,5 billion surplus in September after two months of large deficits. Exports were up by 11,1% m-o-m and 27,5% y-o-y, while imports increased by 0,8% m-o-m and 31,7% y-o-y. During the third quarter exports increased by 9,9% q-o-q (17,5% y-o-y), while imports were up by 13,9% q-o-q (21,5% y-o-y). The strong growth in exports is unlikely to be maintained in the coming months as the global economy continues to show signs of strain. Domestically, the rand remains relatively strong despite its recent weakness, while the decline in global commodity prices will limit growth in export values. Imports, on the other hand, are likely to benefit from some improvement in fixed investment spending. (more...)
• 31 Oct. Mortgage advances: Slow pace of growth in household credit and mortgage advances continued in September. The total value of outstanding credit balances in the South African household sector was up by 5% year-on-year (y/y) to a level of R1 144,5 billion in September 2011, after rising by 5,2% y/y in August. On a monthly basis household credit was R6,8 billion, or 0,6%, higher in September compared with August. Growth in the value of outstanding private sector mortgage balances at monetary institutions, comprising both commercial and residential mortgage loans, showed growth of 2,2% y/y in September, marginally higher than the 1,9% y/y growth recorded in August. The value of total mortgage balances, largely driven by the corporate sector, was up by R4,9 billion, or 0,5%, in September from August. (more...)
• 31 Oct. Absa: SA Morning Sheet. This is a daily economic comment ... The sheets can be downloaded daily from Absa Economic Research An extract fro today's sheet is provided as an example: There is a host of smaller, but nevertheless important, data releases for South Africa this week, starting with the release of private sector credit extension (PSCE) figures this morning. We are in line with Bloomberg consensus forecasts in expecting headline PSCE growth to have slowed to 5.9% y/y in September from 6.1% in August. Base effects are expected to be the main culprit behind the slowdown, given the pick-up in PSCE momentum in H2 2010; on a m/m basis, however, we would expect PSCE growth to have ticked up modestly. (more...)
• 26 Oct. Composite business cycle indicators for South Africa. The composite leading business cycle indicator decreased by 2,1 per cent in August 2011 compared with the preceding month. Ten of the eleven component time series that were available for August 2011 decreased, while one increased. The major negative contributors to the movement in the leading indicator in August were the twelve-month percentage change in the composite leading business cycle indicator of South Africa’s major trading-partner countries, followed by the prices of all classes of shares traded on the JSE. The only positive contribution came from the export commodity price index. (more...)
• 26 Oct. Nedbank Economic Commentary: Medium Term Budget Policy Statement. Growth revised down and deficits higher, but a positive message on the composition and effectiveness of spending as well as on encouraging private sector investment and job creation. A cautious statement against the background of a vulnerable global climate but with the right emphasis on investment, jobs and private sector participation in key sectors. Growth forecasts revised down as faltering developed economies hurt export growth. The budget deficit over the forecast period (2011/12 – 2014/15) rises from already high levels to 5,5% (from 5,3%), 5,2% (4,8%), 4,5% (3,8%) and 3,3%. (more...)
• 25 Oct.. Nedbank Weekly Economic Monitor: Review of 17 to 21 and preview of 24 to 28 October 2011. Global equity markets lacked direction as concerns about the European debt crisis and slower global growth persisted. US economic data confirmed that inflation remains high due to elevated food and energy prices. The Bank of England’s Monetary Policy committee voted unanimously to expand its asset purchase programme. China’s economic growth slowed further in the third quarter as exports weakened. (more...)
• 24 Oct. Absa: SA Morning Sheet. This is a daily economic comment ... The sheets can be downloaded daily from Absa Economic Research An extract fro today's sheet is provided as an example: In a busy week on the South African data calendar, the focus turns to the release of National Treasury’s Medium-Term Budget Policy Statement (MTBPS), which is tabled in parliament tomorrow; the SARB’s leading economic index (Tuesday); and producer price inflation figures on Thursday. Given a somewhat more uncertain economic backdrop than that faced at the time of the February budget, we expect tomorrow’s MTBPS to reflect a deterioration in National Treasury’s economic projections. This should translate into slightly wider budget deficits announced over the forecast period compared with those announced in the February budget. (more...)
• 21 Oct. Residential building activity continues to reflect housing market conditions. Levels of activity in respect of new housing construction in South Africa were up in the first eight months of 2011 compared with the corresponding period in 2010, especially in terms of the planning of flats and townhouses. The construction of new housing was marginally higher in the period January to August this year compared with a year ago, with the category of flats and townhouses contracting by just more than 19% year-on-year (y/y) during this period. On a monthly basis, however, residential building activity was lower on the planning as well as on the construction side in August. (more...)
• 19 Oct. Nedbank Economic Commentary: Consumer Inflation. Consumer inflation gathers momentum in September. Consumer inflation came out worse than market expectations in September, increasing to 5,7 % y-o-y from 5,3 % y-o-y in August. The market expected consumer inflation to rise to 5,6 % in September. Over the month, prices rose by 0,4 %. An increase in housing costs as well as higher prices for services were the main contributors to the monthly increase. Inflation is expected to continue its upward trend in the coming months, rising off the low base established this time last year. Much depends on the direction of the global economy and how this impacts both domestic growth and the rand. (more...)
• 18 Oct. Making banks safer: IMF Working Paper by Chow, Julian T.S. and Surti, Jay. This paper assesses proposals to redefine the scope of activities of systemically important financial institutions. Alongside reform of prudential regulation and oversight, these have been offered as solutions to the too-important-to-fail problem. It is argued that while the more radical of these proposals such as narrow utility banking do not adequately address key policy objectives, two concrete policy measures - the Volcker Rule in the United States and retail ring-fencing in the United Kingdom - are more promising while still entailing significant implementation challenges. (more...)
• 18 Oct.. Nedbank Weekly Economic Monitor: Review of 10 to 14 and preview of 17 to 21 October 2011. Global equity markets shrugged off concerns about the Eurozone, betting that authorities would be able to find a lasting solution to the problem. The rand gained further ground against the US dollar, on higher precious metal prices and better risk appetite. Manufacturing production surprised on the upside in August, rising by 5,6% y-o-y following a 6,2% drop in the previous month, while mining production remained depressed, falling by 3,4% y-o-y following a 5% drop in July. (more...)
• 17 Oct. Absa: SA Morning Sheet. This is a daily economic comment ... The sheets can be downloaded daily from Absa Economic Research An extract fro today's sheet is provided as an example: The focus on the South African data calendar this week turns to the release of consumer price inflation and retail sales numbers, which are both scheduled for release on Wednesday. We forecast headline CPI to rise 5.7% y/y in September (5.3% in August), in line with Bloomberg consensus forecasts. The usual exogenous culprits – food and transport prices – are expected to account for just under half (0.2pp) of our forecasted monthly increase of 0.5ppt while the quarterly price survey in housing should add a further 0.2pp. (more...)
• 16 Oct. Tutu's challenge to G20 leaders. Letter from Desmond Tutu. I urge G20 leaders meeting in Cannes next month to back the efforts of President Sarkozy to introduce a tax on financial transactions to help low-income countries hit by the economic crisis and to protect poor people from climate change. While the international community has been understandably occupied by financial turmoil in Europe and on efforts to boost economic recovery, we must not forget the needs of the world's poorest. The World Bank estimates that 64 million people have been pushed into extreme poverty as a result of the financial crisis triggered by the collapse of Lehman Brothers three years ago. (more...)
• 13 Oct. Nedbank Economic Commentary: Mining production. Mining production rose in August but the overall trend remained weak. Mining production remained depressed in August, declining for the third consecutive month on a year-on-year basis, suggesting that the effects of labour strikes and softer global demand conditions persisted. Total production was down by 3,4% y-o-y after contracting by a revised 5,0% y-o-y (previously -5,1%) in July. On a seasonally adjusted basis mining output rose by 5,2% m-o-m, rebounding from a low base following three consecutive months of decline. Non-gold output fell by 1,1% y-o-y, while gold production plunged by 19,7% y-o-y. (more...)
• 13 Oct. Nedbank Economic Commentary: Manufacturing production. Manufacturing production surprised on the upside in August. Total production rose by 5,6% y-o-y following a 6,2% drop in July, mainly due to increased production of ‘motor vehicles, parts, accessories and other transport equipment’ as well as ‘food and beverages’, which rose by 40,9% y-o-y and 8,7 % y-oy respectively following drops of 5,4% and 2,7% in July. The consensus forecast was for total production to decline by 0,9% y-o-y. (more...)
• 10 Oct. Absa: SA Morning Sheet. This is a daily economic comment ... The sheets can be downloaded daily from Absa Economic Research An extract fro today's sheet is provided as an example: In a relatively quiet week on the South African data calendar, the focus is likely to shift back to the supply side of the economy with the release of manufacturing (Wednesday) and mining (Thursday) production figures for August. Following on from July’s largely strike-induced dip in manufacturing output, which saw output plummet 6.0% y/y, we expect production to return to mildly positive growth territory August, rising 1.0% y/y. Bloomberg consensus forecasts a 0.6% y/y contraction. (more...)
• 10 Oct. SARB: Gold, foreign currency reserves dip 3.4%. Bloomberg. South African gold and foreign currency reserves fell 3.4 percent in September, the biggest decline in almost three years, as bullion slumped and a stronger dollar cut the value of holdings of euros and pounds. Gross reserves dropped to $49.7 billion (R397bn), the Reserve Bank said on Friday, lower than the $51bn median estimate of nine economists. Net reserves fell to $47.9bn from $49.1bn in August. (more...)
• 06 Oct. Unions join Wall Street protests. Labour unions including nurses and transit workers planned to join an anti-Wall Street march on Wednesday through New York's financial district, and some college students walked out of classes in solidarity with the growing protest movement. The American Federation of State County and Municipal Employees, Communications Workers of America and the Amalgamated Transit Union said they would be joining the protesters voicing discontent and anger over high unemployment, home foreclosures and the 2008 corporate bailouts. (more...)
• 04 Oct. Absa: SA Morning Sheet. This is a daily economic comment ... The sheets can be downloaded daily from Absa Economic Research An extract fro today's sheet is provided as an example: Although South Africa’s September PMI certainly moved in the right direction, the below-50 print in the forward-looking new sales orders component was a bit of a dampener. And with the PMI averaging 47.2 in Q3 (55.1 in Q2) we can only continue to believe that real economic activity in the manufacturing sector is likely to have remained in the doldrums (after contracting by 7.0% q/q saar in Q2). (more...)
• 03 Oct. Nedbank Weekly Economic Monitor: Review of 26 to 30 September and preview of 3 to 7 October 2011. Global equities generally ended the week higher, as sentiment improved following the German parliament’s decision to extend the European rescue fund. Private sector credit extension picked up further in August, increasing to 6,1% y-o-y from 5,7% y-o-y in July. Producer inflation gained further momentum, rising to 9,6% y-o-y in August from 8,9% in July, largely due to higher agricultural and metal prices. The trade deficit remained large at R3,7 billion in August following R3,9 billion deficit in July. (more...)
• 03 Oct. SA Reserve Bank: Monthly release of selected data. The data in this release are in tabular form and represent an abstract of statistics published regularly in the Reserve Bank's Quarterly Bulletin. The release is divided into sections covering: Money and banking; Banks and mutual banks; International economic data; Capital market; National government finance; and Economic indicators. The purpose of the Release is to update selected monthly statistics between publications of the Quarterly Bulletin. Download the Release
• 01 Oct. Nedbank Economic Commentary: Trade data August 2011. Another large trade deficit as exports improve from a low base while imports remain strong. Another massive trade deficit of R3,7 billion was recorded in August, well above the market consensus of a R550 million deficit. Exports were up by 8,0% m-o-m and 25,7% y-o-y, while imports increased by 7,2% m-o-m and 21,7% y-o-y. Exports benefited from higher values of ‘mineral products’, ‘precious or semi-precious stones’, ‘base metals’, ‘electrical equipment’ as well as ‘vehicles and equipment’, while imports were boosted by the rise in ‘electrical equipment’, ‘mineral products’, ‘chemical products’ as well as ‘vehicles and equipment’. (more...)
• 30 Sep. Absa mortgage advances: Noticeable slowdown in growth in mortgage advances and total household credit. Based on data released by the South African Reserve Bank, growth in credit extended to the domestic household sector came to 5,2% year-on-year (y/y) in August 2011 (6,6% y/y in July). On a month-on-month basis the amount of household credit was down by R361 million, or a marginal 0,03%, to R1 137,8 billion in August. The abovementioned trends in household credit growth up to August this year were the net result of some components (instalment sales and leasing finance) declining from July to August, while mortgage advances showed only marginal growth from its July level (see below). (more...)
• 30 Sep. Nedbank Economic Commentary: Money supply and credit. Private sector credit growth picks up. Private sector credit extension picked up further in August, increasing to 6,1% y-o-y from 5,7% y-o-y in July. This was well ahead of market expectations of 5,5%. A rise in credit extended to companies, which rose from 5,5% to 7%, and a strong increase in the investments category, were behind the gain. In contrast, credit to households eased off further, moderating to 5,2% from 6,6%, due to a slowdown in mortgages to below 2% y-o-y. Annual growth in money supply rose to 6,2% from 5,6% in July. Consumer credit will remain modest over the coming months. Slower income growth, weak confidence and high debt levels will hamper demand, while banks will be wary of extending credit into areas which face increased regulatory pressures. (more...)
• 29 Sep. Nedbank Economic Commentary: Producer inflation. Producer inflation gained further momentum in August, increasing to 9,6 % y-o-y from 8,9 % y-o-y in July, higher than market expectations of an increase to 9 %. The gain was largely attributed to higher prices for food at the agricultural level (up 2,6 % m-o-m) as well as metal prices (up 2,6 % m-o-m). Producer inflation is expected to edge up over the coming months, but lower commodity prices in the months ahead as well as subdued global growth are expected to put downward pressure on prices next year. (more...)
• 27 Sep. Nedbank Weekly Economic Monitor: Review of 19 to 23 and preview of 26 to 30 September 2011. Concerns about global growth and the worsening debt crisis in Europe, saw global equity markets fall sharply. The rand breached the critical R8 level against the US dollar last week, pressured by continued global risk aversion. As expected, the Reserve Bank’s MPC left the repo rate unchanged at 5,5%. Consumer inflation remained unchanged at 5,3% y-o-y in August. Retail sales for July come out better than expected at 2,8% y-o-y. (more...)
• 26 Sep. Absa: SA Morning Sheet. This is a daily economic comment ... The sheets can be downloaded daily from Absa Economic Research An extract from today's sheet is provided as an example: A lighter week on the South African data calendar sees the release of private sector credit growth and producer price inflation figures on Thursday, and trade balance figures on Friday. We expect credit growth to slow to 5.3% y/y in August from 5.6% in July. At 30% of overall private sector credit extension, we expect the “other loans and advances” category to be the biggest push to overall credit growth in August. We refer to this as “discretionary credit”, as it includes credit cards, overdrafts and personal loans, whereas our calculation of “asset-backed credit” comprises mortgage advances, instalment sales and leasing finance. (more...)
• 26 Sep. BRICS call on Europe to act fast. Economic chiefs of the large emerging economies called on Europe to take action quickly to resolve their economic crisis, saying it was hurting global growth. “European countries need to be quick, bold and cooperative with each other, that's what we recommend,” Brazilian Finance Minister Guido Mantega said after a meeting of the key emerging economies, known as the BRICS. (more...)
• 23 Sep. Short-term momentum in residential building activity appears to be waning. Based on data released by Statistics South Africa, activity with regard to the planning of new housing improved markedly in the first seven months of 2011, with all three segments of the market showing positive year-on-year growth compared with the same period last year. The construction of new housing was also up in the period January to July this year, but the pace of improvement was significantly slower compared with that of the planning phase. However, the momentum in overall residential building activity appears to have tapered off over the past three months. (more...)
• 22 Sep. Nedbank Economic Commentary: Retail sales July 2011. Retail sales came out better than expected in July. Retail sales increased by 2,8% y-o-y in July, up from 2,4% in the previous month, against the consensus forecast for a slowdown to 1,3%. Sales were mainly boosted by the ‘household furniture, appliances and equipment’ category, which rose by 11,6% y-o-y following a 7,3% increase in June as well as firm sales of ‘hardware, paint and glass’ and ‘textiles, clothing, footwear and leather goods’, which increased by 9,3% and 7,9% respectively. (more...)
• 22 Sep. Composite business cycle indicators for South Africa. The composite leading business cycle indicator decreased by 0,9 per cent in July 2011 compared with the preceding month. Six of the ten component time series that were available for July 2011 decreased, while four increased. The major negative contributors to the movement in the leading indicator in July were the twelve-month percentage change in job advertisement space and the business confidence index. The largest positive contribution came from the six-month smoothed growth rate in the real M1 money supply, followed by the prices of all classes of shares traded on the JSE. (more...)
• 22 Sep. Webcast of the Press Conference of the SA Reserve Bank Monetary Policy Committee. The South African Reserve Bank will be webcasting the upcoming press conference to announce the decision of the Monetary Policy Committee live on the Bank’s website. MPC statements are monitored closely, both domestically and internationally, and webcasting should extend reach to those audiences who cannot view the live broadcasts. (more...)
• 21 Sep. Nedbank Economic Commentary: Consumer Inflation August 2011. Consumer inflation beats market expectations in August. Consumer inflation came out better than market expectations in August, remaining unchanged from July at 5,3% y-o-y. The market expected consumer inflation to rise 5,5% in August. Over the month, prices rose by only 0,2%. The prices on most goods and services remained relatively steady. Food prices rose by less than expected (up only 0,3%), while a 1,3% cut in telephone tariffs pushed communication costs down by 0,6% over the month. The only significant upward pressure came from higher transport costs (up 0,4%) due to the 17c/l increase in the petrol price and higher clothing and footwear prices (up 0,6%). (more...)
• 19 Sep. Nedbank Weekly Economic Monitor: Review of 12 to 16 September and preview of 19 to 23 September 2011. Persistent global uncertainty kept the rand under pressure last week. Gross domestic expenditure slowed sharply in the second quarter, dragged down by weak consumer and government spending. The current account deficit widened marginally in the second quarter. The FNB/BER consumer confidence index plunged in the third quarter. Global markets rose firmly last week despite rising concerns about Greece. (more...)
• 19 Sep. Absa: SA Morning Sheet. This is a daily economic comment ... The sheets can be downloaded daily from Absa Economic Research An extract fro today's sheet is provided as an example: It is yet another important week on the South African data calendar with the release of consumer price inflation and retail sales figures on Wednesday while the SARB MPC will deliver its second to last interest rate decision for the year on Thursday. We forecast headline CPI to rise by 5.6% y/y in August (5.3% y/y in July). The usual exogenous culprits – food and transport prices – are forecasted to make up half of the expected 0.4% m/m increase in inflation. (more...)
• 15 Sep. Absa: Latest trends in mortgage debt indicative of economic developments and state of household finances. South Africa’s real economic growth was significantly lower in the 2nd quarter of 2011 on the back of trends in global economic conditions and domestic demand, as well as labour action in some sectors of the economy during the quarter, which adversely affected production and service delivery. Real gross domestic product (GDP) increased at a quarter-on-quarter seasonally adjusted annualised rate of only 1,3% in the 2nd quarter of the year, after rising by 4,5% in the 1st quarter. Consumer price inflation continued its upward trend, reaching a level of 5,3% year-on-year (y/y) in July this year, whereas interest rates were kept stable since last cut in November 2010. (more...)
• 12 Sep. Nedbank Weekly Economic Monitor: Review of 5 to 9 September and preview of 12 to 16 September 2011. Continued risk aversion kept the rand under pressure last week. Manufacturing production plunged by 6 % on both the month and the year in July, while mining production fell by 5,1 % y-o-y in the same month. The international liquidity position rose by $1251million to $49125million in August, boosted mainly by the higher value of gold holdings. The European Central Bank (ECB) left interest rates unchanged at 1,5 %, but a more dovish speech left space for an interest rate cut. The Bank of England also kept rates unchanged at 0,5 %. (more...)
• 12 Sep. Absa: SA Morning Sheet. This is a daily economic comment ... The sheets can be downloaded daily from Absa Economic Research An extract fro today's sheet is provided as an example: With Q3 business confidence indicating a difficult world out there (sinking to 39 from 48 in Q2), we expect Q3 consumer confidence released at 12pm today to follow, moving below its 11 print in Q2. A bleaker global backdrop has driven many sentiment measures very low and we expect a similar trend in Q3 consumer confidence. In our view, low income consumers are likely fretting over job security as the manufacturing sector continues to decline while the higher end of the income chain is probably feeling cautious. (more...)
• 09 Sep. Nedbank Economic Commentary: Mining production - July 2011. Mining production remains under pressure in July. Mining production was weak in July, partly reflecting the impact of labour strikes during that month. Total production contracted by 5,1% y-o-y after falling by a revised 0,1% (previously 0,7%) in June and was down by 4,3% m-o-m on a seasonally adjusted basis, the third consecutive monthly decline after drops of 0,4% and 6,6% were recorded in June and May, respectively. Non-gold and gold output were down by 5,4% y-o-y and 3,5% y-o-y respectively. Output of platinum-group metals slumped by 10,0% y-o-y following a period of strong increases since August 2010, while coal production plunged by 12,8% y-o-y. (more...)
• 09 Sep. Nedbank Economic Commentary: Manufacturing production - July 2011. Manufacturing production collapsed in July. Manufacturing output fell by a sharp 6% m-o-m and 6% y-o-y in July, after growing by a subdued 0,8% y-o-y in June. The drop in output was far worse than the average 0,6% decline anticipated by the market. Over the month, output in most manufacturing industries dropped sharply. Protracted strike action disrupted production in the fuel, chemicals and metals industries, while ongoing outages at key iron and steel plants added further pressure. Underlying demand conditions also weakened due to slower global growth, a strong rand and softer domestic spending. (more...)
• 08 Sep. Latest trends in house prices appear to be unsynchronised. Based on the latest trends in the Absa house price indices for small, medium-sized and large homes, i.e. the middle segment of the South African housing market, for which the bank approved mortgage finance (see explanatory notes), house price growth appeared to be unsynchronised between the abovementioned three categories of housing up to August 2011. These mixed signals regarding house price trends are evident from recent year-onyear as well as month-on-month price growth. (more...)
• 07 Sep. Nedbank Economic Commentary: Reserves - August 2011. Higher gold price boosts the international liquidity position. The international liquidity position rose by $1 251 million to $49 125 million in August, the third consecutive month of improvement. The improvement in both gross reserves and the liquidity position was largely due to a stronger gold price as well as some depreciation in the US dollar against other major currencies, which helped the rise in foreign exchange holdings. There was a slight decline in the forward position after a strong buildup since April this year. Gross reserves are now sufficient to cover around 6,8 months of imports, the highest figure since July 2010. (more...)
• 06 Sep. Nedbank Weekly Economic Monitor: Review of 29 August to 2 September and preview of 5 to 9 September 2011. The rand was firm for most of the week, supported by higher precious metal prices. Growth in real gdp fell to a seasonally adjusted annualised 1,3% q-o-q and 3% y-o-y in the second quarter from a downwardly revised 4,5% q-o-q and 3,5% y-o-y in the first quarter. Private sector credit extension picked up further in July, increasing to 5,7% y-o-y from 5,3% y-o-y in June. The trade account recorded a large deficit in July following a big surplus in the previous month. The US unemployment rate remained unchanged at 9,1%. (more...)
• 02 Sep. Composite business cycle indicators for South Africa. The composite leading business cycle indicator increased by 1,8 per cent in June 2011 compared with the preceding month. Seven of the ten component time series that were available for June 2011 increased, while three decreased. The largest positive contributions to the movement in the leading indicator in June came from a notable increase in the number of residential building plans passed, particularly for flats and townhouses, as well as a marked increase in the twelve-month percentage change in job advertisement space, largely due to the low base that was created in June 2010 as a result of the hosting of the FIFA World CupTM tournament. The major negative contributors were the prices of all classes of shares traded on the JSE, as well as the interest rate spread. (more...)
• 30 Jul. Absa: Mortgage advances growth continues to slow down. Credit extension to the South African household sector amounted to R1 138,1 billion in July 2011, with year-on-year (y/y) growth of 6,6% recorded in July. Month-on-month growth came to 0,2% in July (0,4% in June). Household credit comprises instalment sales agreements, leasing finance, mortgage advances, overdrafts, credit card debt, and general loans and advances. The value of outstanding private sector mortgage balances at monetary institutions, comprising both commercial and residential mortgage loans, was up by 2,9% y/y in July 2011 after rising by 3,3% y/y in June. The value of total mortgage balances was R1,1 billion, or 0,1%, higher in July compared with June this year. (more...)
• 01 Sep. Nedbank Economic Commentary: Trade data July 2011. The trade account recorded a large deficit in July following a big surplus in the previous month. The R3,9 billion deficit in July was a result of a decline in exports, which fell by 6,7% m-om against imports, which rose by 8,5% m-o-m. The decline in exports over the month was mainly attributed to drops in the ‘precious metals and stones’ and ‘base metals’ categories, which fell by 13,6% and 5,6% respectively. Imports were boosted by ‘vehicles and equipment’ and ‘electrical equipment’, which rose by 35,5% m-o-m and 9,7% respectively as well as mineral products, which rose by 8,7% over the month. (more...)
• 31 Aug. Nedbank Economic Commentary: Gross Domestic Product - Q2 2011. Real GDP growth slowed more than expected in the second quarter. Real gdp grew at a much slower pace in the second quarter, falling to a seasonally adjusted annualised 1,3% q-o-q and 3% y-o-y from a downwardly revised 4,5% q-o-q and 3,5% y-o-y in the first quarter. The market expected an increase of 1,6% q-o-q, while Nedbank anticipated 1% growth. The main drag on growth came from manufacturing, mining and agriculture, but economic activity in most other major sectors also slowed over the quarter. (more...)
• 30 Aug. Nedbank Economic Commentary: Money supply and credit - July 2011. Private sector credit growth stagnates. Private sector credit extension picked up further in July, increasing to 5,7 % y-o-y from 5,3 % y-o-y in June. This was well ahead of market expectations. A rise in credit extended to companies, which rose from 3,8 % to 5,8 %, and a strong increase in the investments category, were behind the gain. In contrast, credit to households eased off slightly moderating to 6,6 % from 7,1 %, due to a slowdown in mortgages. Annual growth in money supply eased further to 5,6 % from 6,1 % in June. (more...)
• 29 Aug. Nedbank Weekly Economic Monitor: Review of 22 to 26 August and preview of 29 August to 2 September 2011. Global equity markets recovered slightly last week, following four weeks of losses, as investors re-entered the market in search of bargains. The rand rebounded at the end of the week, mainly helped by a firmer euro. Consumer inflation rose to 5,3 %y-o-y in July from 5 % in June, driven mainly by high food and fuel prices as well as increases in administered prices. Producer inflation also gained further momentum in July, rising to 8,9 %y-o-y from 7,4 % in June, largely due to higher electricity prices as well as an increase in the cost of gas and water. (more...)
• 27 Aug. Nedbank Economic Commentary: Producer price inflation. Producer inflation picks up further. Producer inflation in July came out slightly ahead of our expectations of 8,5% y-o-y, rising to 8,9% from 7,4% in June. Electricity, agriculture and other commodity prices remain the main drivers of producer inflation. Over the month, prices rose by 2,7%, mainly due to the increase in electricity prices as well as gas and water. The mining and quarrying category, agriculture as well as metal products and machinery also contributed towards the monthly increase. Producer inflation is expected to edge up over the coming months, but lower commodity prices and subdued global growth are expected to put downward pressure on prices next year. (more...)
• 25 Aug. Nedbank Economic Commentary: Consumer Inflation July 2011. Consumer inflation picks up further. Consumer inflation came out slightly ahead of market expectations, rising to 5,3% y-o-y in July, up from 5% y-o-y in June. Inflation continues to be driven by high food and fuel prices as well as increases in administered prices. Over the month, prices rose by 0,9%, due to increases in the electricity tariff (up 16%) as well as water and other services (up 8,7% m-o-m). Higher car prices and an increase in the cost of public transport also added to the monthly increase. (more...)
• 25 Aug. Composite business cycle indicators for South Africa. The composite leading business cycle indicator increased by 1,8 per cent in June 2011 compared with the preceding month. Seven of the ten component time series that were available for June 2011 increased, while three decreased. The largest positive contributions to the movement in the leading indicator in June came from a notable increase in the number of residential building plans passed, particularly for flats and townhouses, as well as a marked increase in the twelve-month percentage change in job advertisement space, largely due to the low base that was created in June 2010 as a result of the hosting of the FIFA World CupTM tournament. The major negative contributors were the prices of all classes of shares traded on the JSE, as well as the interest rate spread. (more...)
• 23 Aug. Nedbank Weekly Economic Monitor: Review of 15 to 19 and preview of 22 to 26 August 2011. Global equities fell for the fourth consecutive week as global growth concerns deepened; local markets took their cue from their global counterparts. The rand fell further last week, although slightly. Retail sales rebounded in June, although overall growth remains weak. Economic data released in the US, eurozone and the UK continued to point towards sluggish economic growth, weak labour markets and commodity-price induced inflation pressures. (more...)
• 21 Aug. Minister Shabangu says SA has lost out on foreign investment in the mining sector because the debate on nationalisation had scared away potential investors. SA had lost out on foreign investment in the mining sector because the debate on nationalisation had scared away potential investors, Mineral Resources Minister Susan Shabangusaid yesterday. This is not the first time Ms Shabangu has spoken out against the nationalisation debate, in the past earning the wrath of the African National Congress (ANC) Youth League. (more...)
• 19 Aug. European shares posted steep falls yesterday led by another big drop of stocks in Frankfurt after a slump in stocks across Asia. Europe’s benchmark Euro Stoxx 600 index was down 1.99 percent at 233.32 points in late morning trade as losses began to mount up across the region’s leading bourses. Leading the falls was another sharp decline in Frankfurt, with the market’s main DAX index tumbling by more than 4 percent. London traded down 1.37 percent, while stocks in Paris declined 1.75 percent and by 1.12 percent in Zurich. The euro traded down yesterday and was hovering around $1.44 (R10.24) in late morning trade. (more...)
• 19 Aug. Residential building activity up in the first half of 2011. The level of building activity in the South African housing market showed some improvement in the first six months of 2011 compared with the corresponding period in 2010. In the planning phase, the volume of building plans approved in the higherdensity category of flats and townhouses recorded strong growth. The construction phase of new housing also improved in the first half of the year, but at a slower pace than the planning phase, with a smaller number of new flats and townhouses built compared with a year ago. (more...)
• 15 Aug. Nedbank Weekly Economic Monitor: Review of 8 to 12 and preview of 15 to 19 August 2011. Global equity markets ended the week lower for the a third consecutive week as concern about a possible double dip recession in the US persisted and fears about Europe’s debt crisis remained. The rand remained under pressure on heightened risk aversion. Manufacturing production remained weak in June, growing by only 0,9% y-o-y, slightly down from a revised 1% in May. Mining production also fell in June, dropping by 0,7% y-o-y following 10,7% rise in May. US initial jobless claims fell to a four-month low last week. (more...)
• 12 Aug. Falling SA factory and mine output signals risk of recession. The figures add weight to the case for the Reserve Bank to keep interest rates steady for the rest of this year, despite rising inflation. Manufacturing and mining output both contracted in the second quarter of this year, official data showed yesterday, signalling that growth in the economy slowed sharply in that period. [see posts below] Factory production dropped by 2% compared with the previous quarter, seasonally adjusted, Statistics SA said. Mining output fell 1%, after a decline of 0,8% in the first quarter . (more...)
• 12 Aug. Major SA banks to shed staff. Retrenchments are looming in the home loan departments of two of the four major banks. Jan Kleynhans, the chief executive of First National Bank (FNB) Home Loans, confirmed that the bank was restructuring its sales department but stressed this was not a retrenchment programme across the business but a specific process to improve operating efficiencies in this part of its business. “At the moment we have just taken the first steps by advising some 90 people who may be affected. FNB Home Loans has nearly 1 000 employees. (more...)
• 12 Aug. Nedbank Economic Commentary: Manufacturing production - Jun 2011. Manufacturing output growth remains weak in June. Trading conditions in the manufacturing sector remained subdued in June. Output rose by a seasonally adjusted 0,6% m-o-m and 0,9% y-o-y in June, slightly down from the upwardly revised 1% y-o-y growth recorded in May but better than market expectations of a 0,6% y-o-y increase. Over the second quarter, manufacturing production fell by 2% on a seasonally adjusted basis compared with the first quarter. Over the month, lower output by big exporter-orientated industries, especially petroleum refineries, chemicals, basic iron and steel and non-ferrous metals, contained the increase in total manufacturing production. Softer global demand and production outages at Arcelor Mittal’s steel works in Newcastle and Van der Bijlpark were mainly to blame.  (more...)
• 12 Aug. Nedbank Economic Commentary: Mining production - June 2011. Mining production fell further in June. Activity in the mining sector slowed further in June, with total output down by 0,7% y-o-y after production expanded by a revised 10,7% y-o-y (previously 9,6%) in May. Total production was down by 1,4% m-o-m on a seasonally adjusted basis after plunging by 6,6% in May. Gold output declined by 5,7% y-o-y, while non-gold output was unchanged on a y-o-y basis in June. Output of platinum-group metals rose by 5,1% y-o-y, while coal production was down by 2,9% y-o-y. The outlook for the mining sector has continued to worsen. Global commodity prices are expected to come under pressure as global growth slows. The risk of a sharp correction remains, particularly if the EU debt crisis intensifies and/or the US economy dips into another recession. (more...)
• 09 Aug. DA: Nationalisation calls damage SA. The “mindless calls” for nationalisation irreparably damaged South Africa's attractiveness as an investment destination amidst global economic turmoil, the Democratic Alliance said on Tuesday. “Government must be alert to the minefield of slowing global growth, falling stock markets and the real possibility of sovereign debt defaults in Europe and respond appropriately by ensuring that our public finances can withstand the increasing pressure,” said finance spokesman Dion George in a statement. Government could do this by halting inefficient spending in its ranks and “tenderpreneurial scams” which rob the poorest members of society. (more...)
• 09 Aug. Nedbank Weekly Economic Monitor: Review of 1 to 5 and preview of 8 to 12 August 2011. Both the rand and equity markets fell last week on global risk aversion. Growth in vehicle sales moderated further in July. The international liquidity position rose again in July on the higher international gold price and more Reserve Bank activity in the market. Internationally, markets were rattled by heightened risk aversion on spreading European debt woes. Major rating agencies downgraded the US’s sovereign debt rating from AAA to AA+, the first time in over 70 years that the US has been downgraded. US non-farm payrolls rose faster than market consensus in July, with the unemployment rate falling slightly in that month. Both the ECB and BoE left interest rates unchanged last week. (more...)
• 08 Aug. Absa: SA Morning Sheet. This is a daily economic comment ... The sheets can be downloaded daily from Absa Economic Research An extract fro today's sheet is provided as an example: This morning will be a great test of people who say they do not look at their work email over the weekend. Friday's US downgrade hit the screens only after 8pm NY time, so while these people may look more rested than the rest of us this morning, they are about to receive one almighty shock. Our global colleagues put out several relevant pieces over the weekend, including "S&P downgrade the US long-term rating: First impressions" and "US downgrade: Implications for FX". A playback is also available for Sunday's conference call hosted by our Barcap Research's Heads of US Fixed Income, Asset Allocation, and FX Strategy. Below is a brief summary of that work and some thoughts on SA. (more...)
• 06 Aug. Nedbank Economic Commentary: Reserves. International liquidity improves further on higher gold price and Reserve Bank activity. The international liquidity position improved further to $47 874 million in July from $47 162 million in June, reflecting mainly the rise in the value of gold holdings and more activity by the Bank in the forward market. Gold reserves rose strongly, boosted by a jump in the international gold price during the month. This boosted the value of gross reserves despite the drop in foreign exchange reserves holdings. The Reserve Bank is likely to continue to accumulate foreign exchange reserves during times of rand appreciation. (more...)
• 05 Aug. Cosatu: Nationalisation is a given. Nationalisation is going to happen; it is just the manner in which it will be implemented that needs to be decided, the Congress of SA Trade Unions (Cosatu) said on Thursday. “If you say business needs certainty to make investments... this is the certainty you need to have, that what is being discussed now is models,” Cosatu economist Chris Malekane said at a debate on nationalisation in Johannesburg. (more...)
• 05 Aug. Growth in home values improving further. Year-on-year (y/y) growth in home values in the middle segment of the South African housing market improved further in July 2011, while in real terms, price deflation continued up to June this year. This is based on the latest trends in the Absa house price indices for small, medium-sized and large homes for which the bank approved mortgage finance (see explanatory notes). Nominal house price growth accelerated in both the medium-sized and large categories of the market in July 2011, while price deflation was still evident in the small segment, impacted by the base affect of strong price growth a year ago. In real terms, i.e. after adjustment for the effect of inflation, prices in all three categories of housing declined further in June 2011 compared with a year ago. Real house price calculations are based on consumer price inflation, which increased to 5% y/y in June, from 4,6% y/y in May this year. (more...)
• 03 Aug. Absa plans to work more closely with Barclays. Foreign investors are attracted by new projects, which South Africa does not have, but the country should take advantage of the present boom in commodities which so far it has not benefitted from, according to Absa chief executive Maria Ramos. She said attracting investment was a big challenge for the country. “Foreign investors look to domestic investors for partnerships in order to invest,” she said yesterday, the day of the release of Absa’s half-year results. “They like coming into new projects.” Ramos denied that Barclays, the British bank which is the controlling shareholder of Absa, was considering increasing its stake in its South African subsidiary. (more...)
• 02 Aug. Absa: SA Morning Sheet. This is a daily economic comment ... The sheets can be downloaded daily from Absa Economic Research An extract fro today's sheet is provided as an example: July’s 9.2 index point fall in South Africa’s PMI to 44.2 from 53.9 caused somewhat of a stir in markets, and placed further concerns on the sustainability of the domestic manufacturing sector (and indeed the domestic economy’s) recovery. Underpinning the deterioration in the headline index was a massive 19.3 index point fall in the current business activity sub-index, which sits at a lacklustre level of 35.9. (more...)
• 01 Aug. Nedbank Weekly Economic Monitor: Review of 25 to 29 July and preview of 1 to 5 August 2011. The rand was supported by the gold price, which reached a new record level last week. Annual growth in private sector credit extension remained subdued in June at 5,2% - unchanged from the previous month. Producer inflation rose more than expected in June, increasing to 7,4% y-o-y from 6,9% y-o-y in May. US gdp growth for the second quarter was lower than expected, growing by an annualised 1,3% q-o-q, compared with market expectations of 1,6%. Eurozone, consumer inflation remained unchanged at 2,7% y-o-y in July.  (more...)
• 01 Aug. New law to regulate SA credit rating agencies. The government gave notice at the weekend that the Treasury would be tabling legislation to govern credit rating agencies in South Africa. Finance Minister Pravin Gordhan would pilot the legislation through Parliament but the cabinet has already given its nod to the Credit Rating Services Bill. Economists.co.za director Mike Schussler said that if the legislation was intended to make credit agencies like Moody’s Investors Service or Fitch fearful of issuing negative ratings “it would be very disadvantageous”. (more...)
• 30 Jul. Absa: Continued low growth in mortgage advances. The total value of outstanding credit balances in the South African household sector increased by 7% year-on-year (y/y) in the first half of 2011. On a month-on-month basis households’ outstanding credit balances amounted to R1 135,9 billion in June 2011, which were 0,4% higher than in May this year. Household credit comprises instalment sales agreements, leasing finance, mortgage advances, overdrafts, credit card debt, and general loans and advances. Growth in the value of outstanding private sector mortgage balances at monetary institutions, comprising both commercial and residential mortgage loans, was 3,3% y/y in June 2011 (3,2% y/y in May). The value of total mortgage balances was about R2,8 billion, or 0,3%, higher in June compared with May this year. (more...)
• 30 Jul. Nedbank Economic Commentary: Trade data Jun 2011. The R4,9 billion surplus was the result of a strong increase in exports (up by 7,5 % m-o-m) against a decline in imports, which fell by 2,9 % over the month. The June figure implies that there was a second quarter trade surplus of around R1,4billion following a R4,3billion deficit in the first quarter. It compares with a surplus of R3,4billion in the same period a year ago, with imports rising by 16,5 % and exports by 14,7 % (more...)
• 28 Jul. Nedbank Economic Commentary: Producer inflation. Producer inflation picks up further. Producer inflation rose ahead of market expectations to 7,4% y-o-y in June, up from 6,9% y-o-y in May. The introduction of the winter electricity tariff was mainly responsible for the 4,4% m-o-m increase in producer prices. Agricultural food prices fell over month (3,3%), while the mining and quarrying category was up by 0,6% m-o-m. On an annual basis, the main drivers of producer inflation remained electricity (up 25,5% y-o-y), petrol (up 21,1% y-o-y) as well as chemicals and chemical products. Commodity prices have corrected slightly off earlier highs, which should help to contain producer inflation in the months ahead. However, base effects and the return of some pricing power to producers should push prices at the manufacturing level up modestly. (more...)
• 26 Jul. Composite business cycle indicators for South Africa. The composite leading business cycle indicator decreased by 1,6 per cent in May 2011 compared with the preceding month. Ten of the eleven component time series that were available for May 2011 decreased, while one increased. The major negative contributors to the movement in the leading indicator in May were the number of residential building plans passed and the six-month smoothed growth rate in the real M1 money supply. The only positive contribution came from the twelve-month percentage change in the composite leading business cycle indicator of South Africa’s major trading-partner countries. (more...)
• 25 Jul. Nedbank Weekly Economic Monitor: Review of 18 to 22 July and preview of 25 to 29 July 2011. The MPC left the repo rate unchanged in line with market consensus but presented a more hawkish statement. Consumer inflation rose to 5 % y-o-y in June, while retail sales fell over the month in April. Globally, news of another Greek debt package supported markets, but the US debt ceiling deadlock is expected to weigh on markets this week. European indicators suggested that the eurozone economic recovery is likely to lose momentum in the coming months. Domestic News that Eurozone officials have agreed on a second bailout package to solve the Greek debt crisis improved risk sentiment last week, helping the rand to close firmer at R6,77, R9,72 and R11,03 against the US dollar, the euro and the British pound respectively on Friday, up from R6,88, R9,73 and R11,11 a week earlier. (more...)
• 24 Jul. Residential building activity giving mixed signals. An improvement in building activity in the South African housing market was evident with regard to the planning phase in the first five months of 2011 compared with the corresponding period in 2010. This improvement was mainly in the higher-density category of flats and townhouses. The construction phase, however, showed a contraction, driven specifically by the flats and townhouse category. In the first five months of 2011 the real value of plans approved for new residential buildings was up by 2,4% year-on-year (y/y) to R7,23 billion, from R7,06 billion in the same period last year. The real value of new residential buildings reported as completed in January to May this year was down by 8,9% y/y to an amount of R5,47 billion, from R6,01 billion a year ago. The abovementioned real values are calculated at constant 2005 prices. (more...)
• 21 Jul. Press comment on World Bank Economic Update. South Africa offers “stunning” returns to investors, according to Sandeep Mahajan, a World Bank economist. Yet the economy fails to attract enough investment to achieve the government’s 6.5 percent annual growth target. Growth of that order is needed to create 5 million jobs in the next 10 years – the goal of the New Growth Path outlined by Economic Development Minister Ebrahim Patel. Mahajan was speaking at the launch, in Johannesburg yesterday, of a World Bank economic update on the country, the first of a new, twice-yearly series. The second issue will be released in December. (more...)
• 20 Jul. Nedbank Economic Commentary: Consumer Inflation Jun 2011. Consumer inflation in line with market consensus. Consumer prices rose by 0,4% m-o-m and 5,0% y-o-y in June after increasing by 0,5% m-o-m and 4,6% y-o-y in May. This was in line with the market consensus. Food inflation remained the main driver of the increase in overall CPI, rising to 7,1% y-oy from 6,1% in May, with food prices up by 0,5% during the month. Inflation is expected to rise further in the coming months. Increases in international food and fuel prices are still expected to push inflation to the upper limit of the target band in the final quarter of 2011. Much now depends on the direction of global food and fuel prices, whether second-round effects remain dormant and the rand’s future course. Domestic factors that will contribute to higher inflation will be recent sharp increases in electricity tariffs as well as municipal rates.  (more...)
• 20 Jul. Nedbank Economic Commentary: Retail sales May 2011. Retail sales slump in May. Retail sales for May came out much weaker than expected, falling by a seasonally adjusted 4,7% over the month, leaving total sales little changed from the levels recorded in May last year and down sharply from the 10% y-o-y increase recorded in April. Although April’s high base contributed, May’s figures were much weaker than market consensus forecast of a 7,2% y-o-y rise. The breakdown shows the major categories either declined or grew at a slower pace. The sharpest drops were recorded in the ‘food, beverages and tobacco in specialised stores’ and ‘hardware, paint and glass’ categories, which fell by 8,4% and 8,5% y-o-y respectively. (more...)
• 19 Jul. Mboweni scathing on ‘reckless’ nationalisation row. Former Reserve Bank governor Tito Mboweni has warned that the debate on nationalisation is being "handled recklessly", negatively affecting investor sentiment. While the debate on the call to nationalise mines intensifies, Mr Mboweni has called for cool heads. In an address at the Students in Free Enterprise awards ceremony on Thursday night, Mr Mboweni cautioned against the reckless manner in which the debate had been handled. "The manner in which the issue has been raised has lacked an appreciation for the consensus-building spirit that has informed the construction of new and ongoing agreement in our society," he said. (more...)
• 18 Jul. Nedbank Weekly Economic Monitor: Review of 11 to 15 July and preview of 18 to 22 July 2011. The rand was pressured by low risk appetite on continued worries about the European debt crisis. Annual growth in manufacturing production remained weak at 0,6 % in May after falling sharply to 0,4 % in April, while growth in mining production eased to 9,6 % y-o-y from 12,0 %. US data confirmed that the economic recovery continues to lose momentum, prompting Bernanke to confirm that the Fed is ready to act should the need arise. China economic growth fell in the second quarter, although moderately, suggesting that the Chinese economy could be heading for a soft landing. (more...)
• 18 Jul. Absa: SA Morning Sheet. This is a daily economic comment ... The sheets can be downloaded daily from Absa Economic Research An extract fro today's sheet is provided as an example: A busier week on the South African data calendar sees a host of important data releases and events, kicking off with the release of June CPI and May retail sales figures on Wednesday, and the SARB’s monetary policy committee meeting on Thursday. We expect headline CPI inflation to rise to 4.9% y/y in June (4.6% y/y in May) driven by quarterly price surveys in housing and a pick-up in food inflation. Critically, our estimates put core inflation at 3.4% y/y, a pick-up from May’s 3.2% y/y but still low (especially relative to headline CPI). Though we expect core inflation to rise through 2011 (reaching the midpoint of the target range by that start of 2012), lopsided economic growth should leave it lagging behind headline CPI for longer. As a result, we only see headline CPI temporarily breaching the 6% target ceiling in Q1 12 before moving back within target shortly thereafter. (more...)
• 15 Jul. Nedbank Economic Commentary: Mining production - May 2011. Non-gold mining production remains strong on an annual basis. Growth in mining output dropped to 9,6 % y-o-y in May from a revised 12,0 % (previously 12,4 %) in April, with total production down by 5,9 % m-o-m on a seasonally adjusted basis. Gold output fell by 5,8 % y-o-y, while non-gold output was up by 12,1 % y-o-y. The outlook for the mining sector has worsened in recent weeks. Although commodity prices remain supportive there are indications of a slowdown in global demand. (more...)
• 12 Jul. Nedbank Economic Commentary: Manufacturing production - May 2011. Manufacturing output growth remains weak in May. Growth in manufacturing production remained weak in May following the sharp slowdown in April. Growth rose to only 0,6 % y-o-y from a revised 0,2 % (previously 0,4 %) in April and against the market consensus of 2,4 %. Output was up by 0,4 % m-o-m on a seasonally adjusted basis. Over the month, output in 4 of the 10 major manufacturing industries contracted on a seasonally adjusted basis, with furniture and other manufacturing (-7,4 % m-o-m) the largest decliner. On a year-on-year basis the largest decline was recorded in food and beverages, which was down by 4,2 %. (more...)
• 12 Jul. Absa: SA Morning Sheet. This is a daily economic comment ... The sheets can be downloaded daily from Absa Economic Research An extract fro today's sheet is provided as an example: The production side of the South African economy comes into focus today with the release of manufacturing production numbers from Stats SA this afternoon (13:00 SA time). We are at the low range of economists’ forecasts (cf. 2.4% y/y) in looking for headline growth to have risen 1.1% y/y in May after slowing sharply to 0.4% in April. (more...)
• 12 Jul. Nedbank Weekly Economic Monitor: Review of 4 to 8 July and preview of 11 to 15 July 2011. Local markets lost some earlier gains on Friday on worse-than-expected US employment numbers. The international liquidity position improved in June as the Reserve Bank swapped FDI inflows into the forward market. US non-farm payrolls were weaker than expected in June. The European Central Bank hiked interest rates for the second time this year. Download the full Weekly Economic Monitor
• 11 Jul. Debt-review process hampered by disputes. Disclosures of a debt counsellor’s alleged bid to bribe National Credit Regulator staff with alcohol and sex are among many problems besetting the organisation. Five years after its birth out of the Micro Finance Regulatory Council that it replaced, the regulator is struggling to keep a grip on its mandated role. The debt-review process is battling to function under a quagmire of disputes and the court system is processing as few as 10% of cases brought to it each month. The problems are not just of creditors seeking to stymie the process by holding it up — although there are suggestions that the banks would love to see the system fail. There are signs that the organisation , which had a staff of 90 last year, is under strain from the many roles it has to play. (more...)
• 08 Jul. Moderate growth in home values. June 2011 saw moderate nominal year-on-year growth in home values in the middle segment of the South African housing market, after some price deflation occurred in recent months. This is according to the latest trends in the Absa house price indices, which are based on the average value of homes in the small, medium-sized and large categories of housing for which the bank approved mortgage finance (see explanatory notes). (more...)
• 06 Jul. Busa must find the courage to lead. Has the job of Business Unity SA (Busa) just become harder or easier? Losing one member — when it is the noisy and polarising Black Management Forum (BMF) - is surely a boost. Many have questioned the interest of the BMF under president Jimmy Manyi in standing up for the issues that concern business, given its apparent role as a political lobby group. Busa, which is charged with representing business at the highest levels in its interaction with the government, now has one fewer internal battle to fight before it faces the outside world. (more...)
• 05 Jul. Regulators’ dilemma: no one can see the elephant. Anyone who tries to snatch the punch bowl while the party’s still swinging is going to draw a lot of flak[*]. So financial regulators, who sense trouble but can’t prove it is on the way, are reluctant to move too soon. Their dilemma was summed up in another allegory by Ben Smit, the director of the Bureau for Economic Research, at a Reserve Bank seminar on Friday. (more...)
• 05 Jul. Being too quiet over the ANC Youth League’s nationalisation plans? Humphrey Borkum’s columns have always focused on the JSE and related matters. However after Bobby Godsell's criticism, he addresses the issue. I have known Bobby for over 30 years and I have a deep respect for him and his opinions. These are my personal views and not necessarily those of the JSE. First, I would point out that many businessmen are not comfortable slugging out issues in public. They prefer to stick to their knitting and use networking and the law courts, if necessary, to settle disputes. Second, I would emphasise that the most detrimental effect of nationalisation is that it discourages local and foreign investment – both of which are vital for economic growth. Our mines and our banksare two sectors of the South African economy in which we are world class and they have played a major role in developing the wealth of this country. (more...)
• 05 Jul. Nedbank Weekly Economic Monitor: Review of 27 June to 1 July and preview of 4 to 8 July 2011. Improved risk appetite following news that the Greek government had voted for an austerity plan supported the rand last week. Growth in private sector credit extension eased to 5,2% y-o-y in May from 6,2% in April, dragged down mainly by a contraction in corporate credit. Producer prices rose slightly more than market expectations in May, increasing to 6,9% y-o-y from 6,6% y-o-y in April. The deficit narrowed to R1,0 billion in May from R2,4 billion in April in line with expectations Motor vehicle sales continued to recover in June. (more...)
• 04 Jul. Absa: SA Morning Sheet. This is a daily economic comment ... The sheets can be downloaded daily from Absa Economic Research An extract fro today's sheet is provided as an example: South Africa’s seasonally adjusted PMI slowed for the third consecutive month to 53.9 in June from 55.1 in May. The June print marks the lowest level in the index this year. Underpinning the moderation in the headline index were lower readings in both the current activity and more forward looking sub-indices, with the business activity sub-index slowing to 55.2 (56.8 previously) and the new sales orders sub-component to 58 (61 previously). The PMI employment index also continued to deteriorate in June, slipping to 47.7 from 48.7 the prior month. This marks the fourth consecutive month the index has been below the neutral level of 50 after it moved briefly into positive territory in February. (more...)
• 01 Jul. Absa: Slow pace of growth in mortgage advances continues. Year-on-year growth in the total value of outstanding credit balances in South Africa’s household sector remained unchanged at 6,9% in May from April this year. On a monthly basis households’ outstanding credit balances amounted to R1 131 billion in May 2011, which were 0,5% higher than in the preceding month. Household credit comprises instalment sales agreements, leasing finance, mortgage advances, overdrafts, credit card debt, and general loans and advances. The value of outstanding mortgage balances at monetary institutions, comprising both commercial and residential mortgage loans, increased by 3,1% year-on-year (y/y) in May 2011 (3% y/y in April). Total mortgage balances were up by R5,4 billion, or 0,5%, in May from April. (more...)
• 01 Jul. Nedbank Economic Commentary: Trade data May 2011. The trade deficit narrowed in line with expectations in May In line with market expectations, the trade deficit narrowed to R1,0 billion in May from R2,4 billion in the previous month as exports (up by 9% m-o-m ) grew faster than imports (up 6% m-o-m). Over the month, 20 out of the 22 major categories of imports rebounded following sharp declines in April due to the large number of public holidays. The strongest increase in imports was recorded in the ‘fats and oils’ category, followed by base metals, electrical equipment, and ‘vehicles and parts’. In contrast, imports of mineral products fell sharply over the month, down by 12%. (more...)
• 30 Jun. Nedbank Economic Commentary: Producer inflation. Producer inflation picks up modestly. Producer price inflation picked up modestly to 6,9% y-o-y, only slightly below our forecast of 7% y-o-y from 6,6% y-o-y in April. Higher agricultural prices over the month (particularly vegetables, grain and other foods) as well as oil prices were the main contributors to the monthly increase. Other commodity prices fell over the month, as lower commodity prices globally, filtered through to the domestic economy. On an annual basis, the main drivers of producer inflation remain electricity (up 23,5% yo- y), petrol (up 20,5% y-o-y) and food at the agricultural level (up 8,9% y-o-y) Commodity prices have corrected slightly off earlier highs, which should help to contain producer inflation in the months ahead. However, base effects and the return of some pricing power to producers should push prices at the manufacturing level up modestly over the months ahead.  (more...)
• 29 Jun. IMF Board selects Lagarde as next Managing Director. The Executive Board of the International Monetary Fund (IMF) today selected Christine Lagarde to serve as IMF Managing Director and Madame Chairman of the Executive Board for a five-year term starting on July 5, 2011. Ms. Lagarde, who succeeds Mr. Dominique Strauss-Kahn, is the first woman named to the top IMF post since the institution’s inception in 1944. The selection of Ms. Lagarde by the 24-member Executive Board representing the IMF’s 187 member countries brings to conclusion the selection process initiated by the Executive Board on May 20, 2011 (see Press Release No. 11/191). According to the agreed procedures, the Board had agreed to meet with Mr. Agustín Carstens and Ms. Lagarde for the post. The candidates met bilaterally with Executive Directors, as well as the Executive Board, during June 20-23, 2011. In these meetings, Mr. Carstens and Ms. Lagarde had the opportunity to present all relevant information concerning their specific candidacies. (more...)
• 28 Jun. Cosatu in favour of nationalising mines, banks. The Congress of South African Trade Unions (Cosatu) remains firmly in support of the nationalisation of the mines and the banks. This is stated in Cosatu secretary general Zwelinzima Vavi's report to the union federation's fifth central committee meeting that started on Monday. Vavi's report, parts of which have already been leaked to the media, would be formally presented to the meeting in a closed session on Tuesday. On the question of Cosatu's policy on nationalisation, the report said it was firmly pro the clause in the Freedom Charter that stated the national wealth of the country shall be restored to the people. (more...)
• 27 Jun. Nedbank Weekly Economic Monitor: Review of 20 to 24 June and preview of 27 June to 1 July 2011. The rand was dragged down by risk aversion and softer precious metal prices. Consumer inflation rose more than expected to 4,6 % y-o-y in May from 4,2 % y-o-y in April, mainly as a result of higher food and fuel prices. The current account deficit widened in line with expectations to 3,1 % of gdp in the first quarter of this year from a revised 1,0 % in the fourth quarter of last year. US Gdp growth for the first quarter was revised modestly upwards to an annualised 1,9 % q-o-q from 1,8 % q-o-q. In the Eurozone, new orders of industrial goods increased in April, rising by 0,7 % m-o-m, following a 1,5 % m-o-m decline in the previous month. (more...)
• 27 Jun. Absa: SA Morning Sheet. This is a daily economic comment ... The sheets can be downloaded daily from Absa Economic Research An extract fro today's sheet is provided as an example: It is a marginally quieter week for South Africa data with a host of smaller, but nevertheless important, releases scheduled. Thursday sees the release of private sector credit, producer price and trade data, while on Friday the BER’s purchasing managers index for June is released. (more...)
• 27 Jun. BEE share trading on alternative exchange to JSE. The JSE might finally be facing some competition. Software development company Singular Systems has developed an online trading platform to allow black investors to trade their BEE shares. It has already secured African Bank’s Hlumisa and Eyomhlaba BEE share schemes. According to Singular Systems Etienne Nel, African Bank approached the company to develop a trading platform as it felt the JSE’s systems were too restrictive and expensive. “ They didn’t go to the JSE because they (African Bank) had unique rules for their scheme which the JSE couldn’t cater for,” he says. These include a phased vesting option which only allows investors to sell the shares after certain periods. (more...)
• 27 Jun. Mining wants clarity on nationalisation. South Africa's mining industry will next week meet government officials to "get a feel for their position" on nationalisation. The Chamber of Mines said on Wednesday that it had invited South African deputy president Kgalema Motlanthe to its strategic planning session and there were indications that Mineral Resources minister Susan Shabangu and the ministry's director general Sandile Nogxina would be joining him. Bheki Sibiya, chief executive of the Chamber of Mines, said the industry would also be meeting with the country's banks to discuss how they can deal with the growing call for nationalisation by the ANC Youth League (ANCYL). (more...)
• 24 Jun. Banking and toxic debt. The big banks have made progress in reducing bad debts but a huge amount of toxic debt still clutters balance sheets. Absa has initiated a new campaign aiming to educate its customers on how to reduce debt by learning how credit works and living within their means. But the amount of bad debt on the books of banks does raise questions about the efficacy of their own credit risk management systems, supposedly the most sophisticated in the world. When the blame is put on indebted customers it is often forgotten that banks also have defects in their systems. Part of the problem relates to the volume approach taken by banks, where lending is based on an aggregate view of a market and not always the individual financial circumstances of a customer. (more...)
• 22 Jun. Nedbank Economic Commentary: Consumer Inflation May 2011. Consumer inflation rose well ahead of market expectations (4,3 % y-o-y), increasing to 4,6 % y-o-y in May, up from 4,2 % y-o-y in April. High food prices (up 1,7 % m-o-m), fuel prices (2,9 % m-o-m) as well as personal care items, were mainly responsible for the 0,5 % monthly increase. Past increases in international food and fuel prices are still expected to push inflation to the upper limit of the target band in the final quarter of 2011. Much now depends on whether global food and fuel prices, which appear to have halted their upward trend, will ease off in the coming months and whether the second round effects of inflation remain dormant.  (more...)
• 22 Jun. Business Leadership SA criticises a state takeover of mines and banks. CEO Michael Spicer says Business Leadership SA — which represents larger, established companies — had been quiet on the nationalisation debate but has realised the need to speak up. Big business broke its silence on nationalisation yesterday, when the lobby group for SA’s larger companies criticised a state takeover of mines and banks as "a bad idea, emphatically". Business Leadership SA — which represents larger, established companies — had been quiet on the nationalisation debate but realised the need to speak up, CEO Michael Spicer said yesterday in Johannesburg. (more...)
• 22 Jun. Development finance institutions are crucial for small and medium-sized enterprises (SMEs) across Africa. They struggle to gain access to finance for building and expanding their operations, according to Meshach Aziakpono, professor of development finance at the University of Stellenbosch Business School and programme head of the MPhil in Development Finance. Aziakpono said such businesses often suffered as they were not big enough to raise capital on the stock market or liquid enough to be able to issue bonds to obtain financing. The opening up of finance for these businesses would help to unlock the investment potential in Africa. (more...)
• 21 Jun. Composite business cycle indicators for South Africa. The composite leading business cycle indicator decreased by 0,4 per cent in April 2011 compared with the preceding month. Six of the eleven component time series that were available for April 2011 decreased, while five increased. The major negative contributors to the movement in the leading indicator in April were the number of residential building plans passed and the twelve-month percentage change in the composite leading business cycle indicator of South Africa’s major trading-partner countries. The largest positive contribution came from the twelve-month percentage change in job advertisement space, followed by the export commodity price index. (more...)
• 21 Jun. Both the government and business must show much greater leadership in the mine nationalisation debate. Business Unity SA urged on Monday, following repeated calls by the African National Congress Youth League (ANCYL), again at its national conference last week, for government to nationalise mines and expropriate land without compensation. Busa said, however, that it had noted repeated assurances by President Jacob Zuma that nationalisation was neither a policy of the government, nor that of the ruling party. Busa said constant utterances by the youth league that mine nationalisation was ultimately going to form part of ANC policy created uncertainty. (more...)
• 21 Jun. Report says growth rate set to rise and continent's trade with emerging economies offers more opportunities than threats. A worker inspect facilities on an upstream oil drilling platform at the Total oil platform at Amenem, in the Niger Delta. There is money to be made outside the extractive sector. Photograph: Pius Utomi Ekpei/AFP/Getty Images The publication of the African Economic Outlookreport (jointly published by the African Development Bank, the OECD, the UN Development Programme and the UN Economic Commission for Africa) offers an annual opportunity to review the continent's economic wellbeing. For the last few years the news has been fairly positive, and this year is no exception. (more...)
• 21 Jun. ANCYL puts squeeze on SA economy. The ANC Youth League has raised the pressure for revolutionary economic changes in South Africa with leader Julius Malema demanding that the constitution be changed to sweep away the property clause, that nationalisation be fast-tracked and that farms be distributed among farmers and peasants proportionately. Responding to a series of incendiary comments by the increasingly controversial leader at the national conference of the ruling movement’s youth wing, Steven Friedman, a political economist at the University of Johannesburg said South Africa was “not en route to Armageddon” or a socialist meltdown. (more...)
• 20 Jun. IMF upgrades South Africa’s growth outlook. In its World Economic Outlook (WEO), released on Friday, the International Monetary Fund (IMF) raised its April estimate of 3.5 percent for the current year by a half percentage point to 4 percent and next year’s estimate from 3.8 percent to 4.2 percent. In February, the Treasury predicted growth of 3.4 percent this year, while recent forecasts by private sector economists have ranged between 3 percent and 3.8 percent. (more...)
• 20 Jun. Nedbank Weekly Economic Monitor: Review of 13 to 17 June and preview of 20 to 24 June 2011. The rand ended stronger on Friday, helped by a firmer euro. Retail sales for April come out more than expected, rising by 9,8 % y-o-y, mainly boosted by the large number of public holidays which provided additional time to spend. US consumer inflation rose to 3,6 % in May, up from 3,2 % in April, much higher than market expectations of an increase to 3,3 %. In the UK, Inflation was unchanged at 4,5 % in May. Eurozone industrial production rose by 0,2 % m-o-m, against market expectations of a 0,2 % decline. (more...)
• 17 Jun. Significant improvement in residential building activity. In the first four months of 2011, building activity with regard to new housing in the South African residential property market improved significantly in especially the planning phase compared with the same period in 2010. The construction phase has also showed a turnaround, with the full effect of recent developments in the planning phase expected to be reflected on the construction side at a later stage. The volume of new housing units for which building plans were approved by local government authorities was up by a substantial 24,4% year-on-year (y/y), or 3 086 units, in the first four months of 2011. (more...)
• 16 Jun. Nedbank Economic Commentary: Retail sales April 2011. The annual growth rate rose to 9,8 % from 5,3 % in March, well above the consensus forecast of 5,1 %. Over the month, sales may have been boosted by the large number of public holidays which provided consumers with additional time to spend. All the major categories of sales recorded growth on an annual basis, but stronger contributions came from the 'textiles, clothing, footwear and leather goods' and 'pharmaceutical and medical goods, cosmetics and toiletries' categories, which rose by 16,9 % and 13,7 % respectively. The exceptionally strong retail sales numbers for April is unlikely to signal the start of a new acceleration, however. In the months ahead, sales growth is likely to moderate off the higher base as consumer confidence softens slightly on slow job creation, rising cost pressures and prospects of higher interest rates. (more...)
• 15 Jun. Trade experts yesterday greeted proposals for a new free trade area (FTA) in Africa with scepticism. At the weekend, President Jacob Zuma announced talks on a 26-nation FTA, made up of three existing trading blocs, including the Southern African Development Community (SADC), of which South Africa is a member. While the proposal is designed to stimulate intra-African trade, which now contributes only 12 percent of the continent’s global trade, many doubt it will come to fruition. Stephen Gelb, a professor of development economics at the University of Johannesburg, said: “In Africa there is a long history of leaders signing commitments to free trade or regional integration, but when it comes to implementation nothing happens.” (more...)
• 14 Jun. African Grand Free Trade Area. Negotiations on two of the three phases of the proposed African Grand Free Trade Area must be completed within 36 months, counting from the day of the agreement, according to Trade and Industry Minister Rob Davies. Countries from the Common Market for East and Southern Africa (Comesa), East African Community (EAC) and the Southern African Development Community (SADC) met on Sunday, June 12 at the Sandton Convention Centre in Johannesburg for the second tripartite summit of heads of state and government to formally launch the tripartite free trade area negotiations. (more...)
• 14 Jun. Global payments company Visa, which bought SA's Fundamo for $110 million this week, is taking aim at the massive unbanked market in emerging markets. Bill Gajda, head of global mobile product at Visa Incorporated, told I-Net Bridge/BusinessLIVE in an interview on Friday there are now two billion people in emerging markets with no access to banking services, yet there is ready access to cellphones. So the solution is to have the ability to tap into this opportunity via mobile electronic payments and services technology and support, which is what the Fundamo deal provides. (more...)
• 13 Jun. Nedbank Weekly Economic Monitor: Review of 6 to 10 June and preview of 13 to 17 June 2011. The rand close the week mixed against the major currencies. Manufacturing production slowed more than expected to 0,4 % y-o-y in April due to seasonal and base effects. Mining production rebounded to 12,4 %y-o-y in April from 0,2 % in March, mainly on the back of a strong increase in non-gold production. In the UK, Bank of England kept interest rates unchanged, despite rising inflation, as the Bank remained concerned about the general weakness of the economy. Eurozone growth quickened in the first quarter, due to rising investment and government spending. In the US, the trade deficit shrank in April falling to $43,7 billion from $46,7 billion, the smallest deficit this year. (more...)
• 13 Jun. Vodacom M-Pesa cellphone payments service. Vodacom will target a new market segment to grow its M-Pesa cellphone money service* after a dismal start six months ago. Pieter Uys, Vodacom’s group chief executive, said last month at the cellular network operator’s year-end results that M-Pesa’s launch in South Africa had been “disappointing”, compared with other countries such as Kenya and Tanzania, where its rapid uptake and strong growth had translated into more than a million users. There are only 140 000 registered M-Pesa users in South Africa. (more...)
• 13 Jun. Hillary Clinton said she was not in discussions over the top job at the World Bank. Secretary of State Hillary Clinton on Friday said she was not in discussions over the top job at the World Bank and that she was not pursuing the post. Clinton is in Zambia as part of a five-day Africa trip that is being overshadowed by news that she had expressed interest in moving to head the World Bank. "I have had no discussions with anyone, I have evidenced no interest to anyone and I am not pursuing that position," Clinton told reporters. (more...)
• 12 Jun. Summit of Comesa, EAC and Sadc. SA will host the second summit of the Common Market for East and Southern Africa (Comesa), East African Community (EAC) and the Southern African Development Community (Sadc) on Sunday. The tripartite framework has its basis in the Lagos Plan of Action and the Abuja Treaty establishing the African Economic Community. This has a view to rationalising and consolidating regional economic communities to achieve a common market for the continent, enhancing intraregional trade, attracting investment, and accelerating growth and development. (more...)
• 12 Jun. President of the World Bank. Rumors about Secretary of State Hillary Rodham Clinton’s next job pop up regularly in Washington, but she and her aides knocked down a report this week that she was in talks to become president of the World Bank with more vehemence than with previous rumors, including that she was in line for defense secretary or might elbow Vice President Joseph R. Biden Jr. off the Democratic ticket in 2012. “I have had no discussions with anyone,” Mrs. Clinton said Friday to reporters traveling with her in Africa. “I have evidenced no interest to anyone. I do not have any interest and am not pursuing that position.” (more...)
• 10 Jun. Nedbank Economic Commentary: Manufacturing production - April 2011. Manufacturing output slows sharply on base considerations and seasonal factors. Manufacturing production fell by a sharp 3,7% m-o-m in April, bringing the year-on-year increase down to 0,4% from a downwardly revised 4,9% in March. The market expected output to increase by 5% y-o-y. 􀀟 Over the month, output in 8 of the 10 major manufacturing divisions declined on a seasonally adjusted basis, with motor vehicles and other transport, electrical machinery, and glass and other non-metallic mineral products recording the sharpest drops in output. Over the year, sharp declines in the production of motor vehicles and other transport as well as electrical machinery offset gains in basic metals and machinery. (more...)
• 10 Jun. Home values continued to decline in May. The year-on-year growth in home values in the small, medium-sized and large categories of housing in South Africa for which Absa approved mortgage finance (see explanatory notes) remained under pressure in May 2011. In the first five months of the year, house prices showed an average nominal decline in the small and medium-sized categories, while all three segments recorded real price declines up to April. The declining trend in real home values over the past few months is related to the slower nominal price growth, while the consumer price inflation rate has risen gradually during this period to a level of 4,2% in April. (more...)
• 07 Jun. Expert believes policy differences in Southern Africa and East Africa could derail bid for free-trade. A trade expert yesterday warned that vested interests and policy differences in the East Africa and Southern African region could derail a bid to create a free-trade agreement among 26 countries unless there was enough "political stomach for deeper (regional) integration". Heads of state of all 26 countries will on Sunday agree on a plan to authorise a "grand free trade" agreement between the Common Market for Eastern and Southern Africa (Comesa),, the East African Community and the Southern African Development Community (Sadc). The meeting, which will be held in Johannesburg, is expected to be chaired by President Jacob Zuma. (more...)
• 07 Jun. Nedbank Economic Commentary: Reserves - May 2011. International liquidity falls mainly on lower foreign currency holdings and a lower gold price. The international liquidity position dropped to $45 864 million in May from $46 039 million in April. A weaker US dollar and a slightly lower gold price reduced the value of gross gold and foreign exchange reserves to $50 119 million from $50 602 million The Reserve Bank is likely to continue to accumulate foreign exchange reserves in order to reduce some of the upward pressure on the rand. Governor Gill Marcus recently announced that the Bank bought around R54 billion of foreign currency reserves over the past year. These figures have little direct implication for monetary policy. We expect interest rates to remain unchanged until early 2012. (more...)
• 07 Jun. SA Reserve Bank: Monthly release of selected data - May 2011. The data in this release are in tabular form and represent an abstract of statistics published regularly in the Reserve Bank's Quarterly Bulletin. The release is divided into sections covering: Money and banking; Banks and mutual banks; International economic data; Capital market; National government finance; and Economic indicators. The purpose of the Release is to update selected monthly statistics between publications of the Quarterly Bulletin. Download the Release
• 06 May. Absa: SA Morning Sheet. This is a daily economic comment ... Download the sheet at Absa Economic Research
• 06 Jun. Business to benefit most from free trade area. Heads of state to meet on Sunday to agree on a plan to authorise a "grand free trade" agreement Business is the most likely lobby that is set to benefit from a bold initiative to create a free trade agreement among 26 countries in Southern Africa. Heads of states of these countries will on Sunday agree on a plan to authorise a "grand free trade" agreement between the Common Market for East and Southern Africa (Comesa), East African Community (EAC) and the Southern African Development Community (Sadc). (more...)
• 06 Jun. Nedbank Weekly Economic Monitor: Review of 30 May to 3 June and preview of 6 to 10 June 2011. The rand was supported by news that the Competition Tribunal had approved the $2,4 billion merger deal between Walmart and Massmart Holding last week. Real gdp growth for the first quarter came out higher than expected, at a seasonally adjusted annual rate of 4,8% q-o-q, up from 4,5% in the final quarter of last year. Growth in domestic credit picked up slightly in April, increasing by 6,2% y-o-y from 5,1% y-o-y in the previous month. In the US, the unemployment rate rose to 9,1%, its highest level since September last year. In the Eurozone, Consumer inflation remained unchanged at 2,8% in May. (more...)
• 06 Jun. Credit rating in Moody’s spotlight. At a time when ratings agencies are getting tough on global borrowers, South Africa’s credit status is under scrutiny. Ratings agency Moody’s Investors Service will hold a sub-Saharan Africa credit risk conference in Johannesburg on Thursday, which will cover topics such as sovereign debt and the debt of banks, corporates and the South African municipal sector. Moody’s could use the occasion to make a change to South Africa’s outlook, currently stable with an A3 rating, which is four notches above sub-investment grade. A country’s credit standing determines the interest rate it has to pay when it borrows funds – a bill which is met by the taxpayers. (more...)
• 06 Jun. SA seeks to alter balance of Brics trade. The government wanted to address structural imbalances in the trade relations between South Africa and Brazil, Russia, India and China, the countries which make up the Brics bloc, Minister of Trade and Industry Rob Davies said last week. Davies said the objective of this process was to get the country to sell more value-added products to its Brics partners instead of exporting just the primary products. He said South Africa was well placed as a result of joining Brics, and it needed to reinforce its ability to become more important in the global arena. (more...)
• 01 Jun. Nedbank Economic Commentary: Trade data April 2011. A trade deficit of R2,4 billion was recorded in April following a small surplus in the previous month. Trade activity was reduced by a large number of public holidays in April, with exports (down by 14,2% m-o-m) falling at a faster pace than imports (down by 8,7% m-o-m). Over the month, 19 out of the 22 major categories of exports recorded declines, with sharper drops coming from 'precious or semiprecious stones', which fell by 14,2% m-o-m as well as 'mineral products', which dropped by 6,3% m-o-m. Imports were mainly dragged down by the electrical equipment category, which fell by 10,2% m-o-m. On the upside, imports were driven by mineral products, which rose by 41,5% m-o-m. (more...)
• 01 Jun. Absa: Growth in mortgage advances at a low. Based on the latest data released by the South African Reserve Bank, the total value of outstanding credit balances in the country’s household sector increased by 6,9% year-on-year (y/y) and 0,1% month-on-month (m/m) to a level of R1 126 billion in April 2011. In March this year, household credit growth of 7% was recorded compared with the same month last year. Household credit comprises instalment sales agreements, leasing finance, mortgage advances, overdrafts, credit card debt, and general loans and advances. (more...)
• 01 Jun.. Nedbank Economic Commentary: Gross Domestic Product. Real gdp growth surprised on the upside in the first quarter. Real gdp grew at a seasonally adjusted annual rate of 4,8 % q-o-q in the first quarter, up from 4,5 % in the final quarter of last year and substantially above market expectations of a 4,2 % increase. Nedbank expected growth of 4,3 % q-o-q. The main boost came from the manufacturing sector, with strong contributions from domestic trade and accommodation, finance and real estate as well as transport and communications. However, growth in most other major sectors slowed somewhat, while agricultural production contracted by 2,6 % q-o-q. (more...)
• 31 May. IMF Managing Director. Finance Minister Pravin Gordhan says the G8 countries' decision to back French Finance Minister Christine Lagarde as the next managing director of the International Monetary Fund goes against a G20 agreement. The G8 decision to support Lagarde is in line with a tradition that a European always leads the IMF, according to a report on the SA Broadcasting Corporation's (SABC's) website. Gordhan is co-chair of the G20 committee on reforming the IMF. "The G8 countries are part of the G20, and within the G20 there are countries that have agreed on a process that would be very different from the historical process  - and a process that is based on transparency, a process that will ignore nationality,"  Gordhan was quoted as saying. (more...)
• 30 May. Nedbank Weekly Economic Monitor: Review of 16 to 20 May and preview of 30 May to 3 June 2011. The rand fell sharply in the middle of the week on rumours of electricity blackout during the winter season, but recovered some ground after Eskom denied such speculations, while firmer precious metal prices also supported the local unit. Producer inflation for April came out less that expected, easing to 6,6% y-o-y from 7,3% in March. At the May Monetary Policy Review, the South African Reserve Bank Governor emphasised that the MPC would be on the lookout for second-round effects of inflation. (more...)
• 28 May. Standard Bank Africa Telegraph. Selected news events for 17 May - 24 May 2011. Africa The second Africa – India Forum Summit (20-25 May), is currently taking place at the African Union's headquarters in Addis Ababa, Ethiopia. The Summit Forum falls within the framework of partnership between Africa and India. It is a follow-up of the first Africa-India Forum which took place in New Delhi in 2008 during which the New Delhi Declaration and Framework of Cooperation was adopted. The second Summit's main objective is to evaluate the progress of this partnership to date, further deepen relations, and reaffirm the commitment to promoting cooperation in priority areas. (Source: AU, N24, 20/05. (more...)
• 27 May. Nedbank Economic Commentary: Producer inflation. Lower commodity prices help ease producer inflation. Producer inflation eased to 6,6% in April from 7,3% in March, against market expectations of a decline to 7%. The larger-than-expected moderation in producer inflation was due to declines in the prices of fresh produce as well as lower prices for metal ores and coal. The year-on-year increase in the mining and quarrying category moderated sharply, easing to 4,6% from 8,1% in March. Inflation at the manufacturing level, eased slightly from 5,9% to 5,7%. In contrast, inflation in the electricity and gas category remains elevated at 23,1% y-o-y. Commodity prices have correctly slightly off earlier highs, which should help to contain producer inflation in the months ahead. However, base effects and the return of some pricing power to producers, should push prices at the manufacturing level up modestly over the months ahead. (more...)
• 27 May. Regulation of SA banks. The quality and conservatism of banking regulation and prudential supervision of banks in South Africa has been positive for the banking system in the view of rating agency Standard & Poor's. "In particular, we believe tight regulation helped protect South African banks from the most severe effects of the global financial crisis," Standard & Poor's primary South African bank credit analyst Matthew Pirnie said on Thursday. He said the higher-than-average minimum regulatory capital adequacy ratios (for developed economies) and the good risk-management framework of the major banks had helped maintain confidence in domestic banks. (more...)
• 27 May. Senior Deputy Governor Dr XP Guma’s second five-year term of office with the South African Reserve Bank expires on 31 July 2011, after 16 years of uninterrupted service. Dr Guma has advised President JG Zuma and the Board that after ten years as Deputy Governor, he has decided not to renew his contract. The President will, in due course and after consultation with the Board, advise the Bank as to who he has decided to appoint as the Deputy Governor to succeed Dr Guma. (more...)
• 25 May. Nedbank Economic Commentary: Monetary Policy Forum. At the Monetary Policy Forum (MPF) held on 24 May the focus was on rising inflationary pressures against the backdrop of weak underlying economic growth. In the questions and answer session, many of the questions related to the South African Reserve Bank’s (SARB) role in promoting employment growth and the SARB’s view of the fair value of the rand. The Governor and other MPC members re-emphasised that the SARB’s mandate was to maintain price stability, highlighting that a stable prices and interest rates environment would contribute to economic growth, with former National Treasury Director General and now Deputy Governor Lesetja Kganyago jokingly remarking that he “now believes that the Reserve Bank should be independent”. (more...)
• 25 May. Absa Emerging Markets Research: SA Morning Sheet. Last night’s Monetary Policy Forum hosted at the SA Reserve Bank and the release of the Bank’s Monetary Policy Review yielded much the same rhetoric as that observed in its most recent MPC statement. At present, the SARB continues to see very little evidence of demand-driven inflationary pressures in the economy, with the main upward pressures on prices coming from supply-side (cost-push) factors in food, fuel and wages. The MPC continues to project CPI to reach the upper 6% inflation target band by Q4 2011, breaching the upper limit in Q1 2012 and reaching a peak of 6.3% before moving back within the upper bound of the target for the remainder of 2012. (more...)
• 25 May. Managing director of the IMF. Top emerging economies joined forces to slam Europe's “obsolete” grip on the IMF's top job, even as France's finance minister, Christine Lagarde, appeared to strengthen her lead in the race to replace Dominique Strauss-Kahn. Brazil, Russia, India, China and South Africa, known as the BRICs, sharply criticised European officials on Tuesday for suggesting the next International Monetary Fund head should automatically be a European. In the first joint statement issued by their directors at the Fund, the BRICs said the choice should be based on competence, not nationality, and called for “abandoning the obsolete unwritten convention that requires that the head of the IMF be necessarily from Europe”. (more...)
• 24 May. The composite leading business cycle indicator decreased by 0,9 per cent in March 2011 compared with the preceding month. Seven of the ten component time series that were available for March 2011 decreased, while three increased. The largest positive contribution to the movement in the leading indicator in March came from the number of residential building plans passed, followed by the interest rate spread. The major negative contributors were the twelve-month percentage change in the composite leading business cycle indicator of South Africa’s major trading-partner countries, as well as the twelve-month percentage change in job advertisement space. (more...)
• 24 May. A South African who could be in line to lead the International Monetary Fund is joining calls for the West to relinquish its hold on the financial body's leadership. Trevor Manuel, who earned praise during his 1996-2009 tenure as South Africa's finance minister, told state TV on Monday that developing countries were playing an increasingly important role in the global economy, and that it is "fundamentally wrong" that "birthright is more important than ability" in choosing the IMF chief. A European has headed the institution since the first managing director was named in 1946, a tradition developing countries are criticising. An American has traditionally held the top job at the IMF's sister agency, the World Bank. (more...)
• 24 May. Research shows SA is lagging behind other Brics countries in clinching deals in Angola. SA lagged behind Brazil, Russia, India and China, its fellow members in the Brics emerging market bloc, in using its political and commercial capital to clinch significant contractual agreements in Angola, research published last week by financial services group Standard Bank found. Angola is the continent’s second- largest producer of crude oil and accounts for 6% of Africa’s gross domestic product (GDP), 10% of its trade and 5% of investment flows. (more...)
• 23 May. Nedbank Weekly Economic Monitor: Review of 16 to 20 May and preview of 23 to 27 May 2011. The rand was supported by higher precious metal prices. Consumer inflation rose by less than expected in April, increasing to 4,2 % y-o-y from 4,1 % in March. Retail sales remained firm in March, increasing by 5,1 % y-o-y. Eurozone inflation rose further in April, increasing to 2,8 % from 2,7 % in March, due to higher food and fuel prices. UK's inflation also rose to its highest level since October 2008, increasing to 4,5 % in April from 4 % in March. In the US, housing starts fell at an annualised rate of 11 % in April, following a 7,3 % increase in March. (more...)
• 22 May. FNB Comment: Brave Sick Europe. Over the years we have at times heard about the ‘Sick Man of Europe’, designating so anyone straggling in the European ranks, especially if formerly in the lead. There is here an element of schadenfreude (malicious enjoyment of others’ misfortune). So Germany in its day was sick. And France had its turn. And so down the ranks. Today most of the Club Med periphery is beyond the pale. But the real sick man is Europe overall. Surprising, perhaps, with Germany growing 6% annualized and France 4% in 1Q2011. But consider the bigger picture. (more...)
• 20 May. Residential building activity improved in the first quarter of 2011. Building activity in respect of new housing in the South African residential property market showed some improvement in both the planning and construction phases in the first quarter of 2011 compared with the corresponding period in 2010. The number of new housing units for which building plans were approved by local government authorities was up by 14,6% year-on-year (y/y), or 1 331 units, in the first three months of 2011. This increase in plans approved was driven by the segments of houses smaller than 80m², and flats and townhouses. These developments are regarded as an indication of a growing demand for smaller-sized and higher-density housing against the background of the affordability of housing and mortgage finance, impacted by the general state of household finances. (more...)
• 19 May. Interest from international investors in Africa was on the rise as they continued to inject money into the continent despite perceptions of ongoing political turmoil, Coronation Fund Managers said yesterday. The firm said African portfolios attracted significant interest from investors in the six months to March and it continued to build a strong performance track record. Releasing its interim financial results for the six months to March, Coronation reported a 26 percent increase in diluted headline earnings a share to 81.7c from 64.8c in the comparable period last year. (more...)
• 17 May. Nedbank Economic Commentary: Retail sales March 2011. In line with our forecast, growth in retail sales slowed to 5,1 % y-o-y in March from 5,5 % in February. The consensus forecast was 5,2 %. Over the month, retail sales increased by a seasonally adjusted 0,3 % following a 1,2 % drop in February. Six out of the seven sub categories of retail sales expanded on a year- on-year basis, with stronger contribution coming from the 'household furniture and appliance' category, which rose by 11,8 %. 'Food, beverages and tobacco' is the only category which continues to experience persistent declines, with sales falling for the third consecutive month in March, down by 6,8 % y-o-y. During the first quarter of the year, sales rose by a seasonally adjusted 1,7 % q-o-q following a 1, % increase in the final quarter of last year. Compared with the first quarter of 2010, retail sales rose by 5,6 % on an adjusted basis, mainly pushed up sales in general dealers, which rose by 5,4 % followed by 'textiles and clothing', which increased by 5,1 % y-o-y. (more...)
• 17 May. Nedbank Economic Commentary: Consumer Inflation April 2011. Consumer inflation rose by less than expected in April, increasing to 4,2 % from 4,1 %, compared with market expectations of a rise to 4,4 %. Higher petrol prices as well as an increase in the cost of some categories of services were mainly responsible for the monthly increase. This was partly offset by a decline in food and durable goods prices. Higher food and fuel prices are still expected to push inflation to the upper limit of the target band in the final quarter of 2011. Much now depends on whether global food and fuel prices, which appear to have halted their upward trend, will ease off in the coming months as global growth slows. If this is the case inflation should fall back below 6 % in early 2012. Despite rising inflation, we still expect the Reserve Bank's MPC to delay its first hike until early 2012 as an early interest rate increase would risk curbing economic growth. (more...)
• May 17. Selected news events for 10 May-17 May 2011. The World Bank has revised its strategies for support to sustainable economic growth and development policies in Africa. World Bank country representative Kapil Kapoor said that the new 10-yr programme with a vision of not just ensuring economic growth but ultimately sustainability and job creation, is now more centered on the youth and poverty reduction. Among issues to be addressed are; the provision of quality education and skills development, improved service delivery, proper resource management and protection against climate change. The10-yr strategy is expected to increase at least 20 countries’ per capita income by 50%. (more...)
• 16 May. FNB Comment: Global case for SARB delaying rate hikes. When projecting inflation to double to over 6% shortly, even a still modestly performing economy should not keep the SARB from taking back some of its recent interest rate generosity, considering that it allowed real interest rates to fade beyond to where they strictly should be under ‘normal’ conditions. But there probably still is another case for holding back with rate hikes, potentially as long as possible. This shines through in the commentary about external risks, and the uncertainties surrounding these, without getting too explicit. Apparently, we must leave something for the imagination, even for markets. No one wants to cry wolf too often or become known for telling scare stories. Still, the external picture is an intimidating one. (more...)
• 16 May. Nedbank Weekly Economic Monitor: Review of 9 to 13 May and preview of 16 to 20 May 2011. The rand was pressured by lower precious metal prices, risk aversion and a firmer US dollar. The South African Reserve Bank's (SARB) Monetary Policy Committee (MPC) left the repo rate unchanged at 5,5 %. Manufacturing production rose by 4,6 % y-o-y in March, while mining production declined by 1,4 %y-o-y. The dollar gained against the euro last week on continued concerns that Greece might default. US consumer inflation rose to its highest level in more than two years, increasing to 3,2 % y-o-y. The Eurozone economy grew by 0,8 % q-o-q in the first quarter of 2011, following growth of 0,3 % in the final quarter of 2010. (more...)
• 16 May. Higher density housing. Factors such as the affordability of housing and the increasing scarcity of serviced vacant land available for residential development in the past few years saw a major focus on higher-density residential property developments in South Africa, especially in the major metropolitan areas. These developments, consisting mostly of flats and townhouses, were also the focus of an increasing number of property investors and speculators, which caused strong growth in the demand for and supply of these types of higher-density housing. More than 251 000 new flats and townhouses were reported to have been constructed from 1995 to 2010.Due to factors such as the affordability of housing and the increasing scarcity of serviced vacant land available for residential development in especially the major South African metropolitan areas, the popularity of higher-density housing developments increased over the years.  (more...)
• 16 May. FNB Comment: Plenty second round effects. The SARB uses certain terminology in unpacking inflation and its prospects. This needs perhaps to be unpacked further in order to fully appreciate where we are. SARB distinguishes between demand side and supply side inflation pressures. Demand pressure starts to become a feature where available production capacity has been taken up, with extra demand on top increasing the temptation for businesses to increase profit margins and labour to demand shortage premiums (both essentially rationing responses), accelerating (upping) the inflation pressure. Supply side cost pressure are international commodity prices (oil, food) surging higher, unions politically wanting to “close the wage gap”, Eskom winning high price increases because of earlier planning mistakes and having to obtain a structural improvement in its cash flow to pay for ambitious expansion plans. (more...)
• 12 May. Economic Update. Monetary Policy Committee (MPC) decision The MPC has left the repo rate unchanged at 5,5 %, in line with market expectations. The SARB has revised its inflation forecasts upwards, with inflation forecast to rise above6 % in the final quarter of 2011. Risks to the inflation outlook emanate mainly from international cost-push factors, while the outlook for global inflation has deteriorated somewhat on the back of higher food and oil prices. The SARB has revised its growth forecasts slightly downwards, with gdp growth now forecast at 3,6 % (previously 3,7 %) for 2011. (more...)
• 11 May. FNB: Timing any changes in policy stance. With inflation steadily creeping higher (CPI now at 4.1% but likely to rise quickly in coming months towards 6% by year end), yet with formal employment persistently stuck at 9.2 million and total employment at 13.1 million (well off peak levels), the monetary policy stance may not stay unchanged indefinitely. Yet any chance is unlikely to be abrupt, given inflation within or near the target zone, the output gap only gradually narrowing and credit growth tepid. Financial markets discount a 50/50 chance of the first rate hike of 0.5% occurring in September, and are only fully discounting this first hike by November 2011. If SARB follows through, we should end the year at prime 9.5% compared to 9% now, with further hikes in 2012 taking prime to 11% or thereabouts. (more...)
• 09 May. Nedbank Weekly Economic Monitor: Review of 2 to 6 May and preview of 9 to 13 May 2011. The rand was slightly weaker due to a stronger US dollar and weaker international commodity prices. Local bonds were little changed ahead of the outcome of this week's MPC meeting, but equities fell sharply as investors sold resources on weaker commodity prices. The local labour market remained weak in the first quarter of 2011, with the unemployment rate rising to 25 % from 24 % and the economy shedding about 14000 jobs over the quarter. Seasonal factors pushed new vehicle sales sharply down in April and the Kagiso/BER PMI points to softer trading conditions in the manufacturing sector in April. US non-farm payrolls came were above expectations. (more...)
• 09 May. Home values came under further pressure in April: Home values in the small, medium-sized and large categories of housing in South Africa for which Absa approved mortgage finance (see explanatory notes), experienced some further strain in April 2011 on a year-on-year basis. However, some marginal nominal growth occurred on a monthly basis in April in each of the abovementioned segments. In the first four months of 2011, average nominal year-on-year price growth was still positive in the three categories of housing compared with a year ago. In real terms, home values dropped further in all three segments in March 2011 on the back of headline consumer price inflation rising to 4,1% year-on-year (y/y) in the month from 3,7% y/y in February. In the period January to March this year, real price declines occurred in the three categories compared with the corresponding period in 2010. (more...)
• 06 May. FNB: The Rex Column: South Africa keeps gearing up. Things are looking up. Oil at $124. Petrol over R10/l. PPI inflation at 7.3%. Rand at 6.62:$ (after 6.56). But also SARB leading indicators up another 1%. Gold $1550, platinum $1861 (both well off weekend peaks). Not everything in those two lineups rate as good news. Even as global support for us keeps multiplying, with export commodity prices steadily gaining, domestic activity maintaining momentum and getting broader of beam, we find oil and stronger Rand strangling us. (more...)
• 06 May. Standard Bank Africa Telegraph. Selected news events for 26 Apr – 3 May 11. Botswana Gaborone – The Monetary Policy Committee of the Bank of Botswana decided to maintain the bank rate at 9.5% at its meeting on 26 Apr. The MPC believes that the increase in food, fuel and administered prices will drive inflation higher than the target in the short term but will revert to the 3-6% target range in the medium term. (Source: BOB, 26/04). (more...)
• 04 May. Vehicle sales: Total vehicle sales fall sharply on seasonal factors. Total vehicle sales fell by a sharp 28 % m-o-m in April with all categories of sales down sharply, reflecting mainly fewer business days during the month and the higher base established in the first quarter of this year. On an annual basis sales were higher, confirming the underlying improvement in the vehicle market during recent months. Passenger car sales will continue to benefit from low interest rates and income growth during 2011, although high household indebtedness, a weak labour market and rising cost pressures will restrict the rate of recovery. The gradual recovery in fixed investment activity should support sales of commercial vehicles. (more...)
• 04 May. Housing Review Summary. Growth in South Africa’s real gross domestic product rebounded to a seasonally adjusted annualised rate of 4,4% in the fourth quarter of 2010 after growth slowed down to below 3% in the preceding two quarters on the back of industrial action in some sectors of the economy. After growing by 2,8% in 2010, the economy is forecast to expand by a real 3,8% in 2011, supported by global growth and increased domestic demand.   (more...)
• 03 May. Economic review of 25 to 29 April and preview of 2 to 6 May 2011. The rand held firmer on low risk aversion and higher precious metal prices. Growth in bank credit extension and money supply was slower than expected in March. Producer inflation rose in line with expectations to 7,3% y-o-y in March, driven by higher commodity prices. (more...)
• 03 May. According to the South African Reserve Bank, the total value of outstanding credit balances in the country’s household sector increased by 7,4% year-on-year (y/y) and 0,8% month-on-month (m/m) to a level of R1 127,8 billion in March 2011. Year-on-year growth of 7% was recorded in February this year. Total household credit comprises instalment sales agreements, leasing finance, mortgage advances, overdrafts, credit card debt, and general loans and advances. (more...)
• 29 Apr. The trade account turned to a R900million surplus in March following two months of deficits. The consensus was for a deficit of R900million; exports increased by 15,3 %m-o-m, while imports rose by 12,7 % m-o-m. For the first quarter, a R4306million deficit was recorded following a surplus of R15519million in the previous quarter. Exports were up by 22,9 % while imports increased by 18,1 % compared with the first quarter of 2010. (more...)
• 28 Apr. The composite leading business cycle indicator increased by 1,0 per cent in February 2011 compared with the preceding month. Nine of the eleven component time series that were available for February 2011 increased, while two decreased. The largest positive contribution to the movement in the leading indicator came from the BER Business Confidence Index, followed by the average hours worked per factory worker in manufacturing as calculated by the BER; the two negative contributors in February were the number of building plans passed for flats, townhouses and houses larger than 80m², as well as the six-month smoothed growth rate in the real M1 money supply. (more...)
• 18 Apr. SARB announces early retirement of Mr Errol Kruger Mr Errol Kruger, the Registrar of Banks, will go on early retirement with effect from 31 July 2011, after 34 years of uninterrupted service at the South African Reserve Bank. Mr Kruger joined the bank as a clerk and progressed through the ranks to the level of Registrar, a position he has held for the past eight years. He serves on the Governors’ Executive Committee, the Risk Committee, the Financial Stability Committee and also presents to the Monetary Policy Committee. (more...)
• 18 Apr. Nedbank Weekly Economic Monitor: Review of 11 to 15 April and preview of 18 to 22 April 2011 The rand was pressured by profit taking last week. Mining production remained firm in February, but the annual growth rate moderated to 2,8 % from 3,2 % in January. Concerns that Greece might default on its debt and that the Federal Reserve may begin tightening monetary policy, eroded investors' confidence last week and put downward pressure on equities. (more...)
• The World Development Report 2011: Conflict, Security and Development follows a speech delivered by Zoellick in 2008 to the International Institute for Strategic Studies, entitled “Fragile States: Securing Development”. Noting that military and development disciplines too often worked on separate paths, Zoellick called for bringing security and development together to break the cycles of fragility and violence affecting more than one billion people. The report notes that at least 1.5 billion people are still affected by current violence or its legacies.  The report shows how 21st century organized violence appears to be spurred by a range of domestic and international stresses, such as youth unemployment, income shocks, tensions among ethnic, religious or social groups, and trafficking networks.   (more...)
• Absa: Quarterly Economic Perspective Q2 2011. Searching for symmetry From 2.8% GDP growth in 2010 we look for growth to accelerate to improve to 3.8% y/y in 2011 and to 4.2% y/y in 2012. A key feature of the current growth trajectory is its unevenness, as consumers have done most of the work. Though not surprising given high nominal wage settlements, low inflation and 650bp in interest rate cuts (which together boosted real incomes and reduced debt servicing costs) a sobering aspect of the economic recovery has been persistent weakness in fixed investment spending. (more...)