Nedbank: Trade data

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.
• Trade statistics are volatile and will remain so in the months ahead, with exports likely to benefit from global recovery and firm commodity prices, while imports will be supported by firmer consumer demand and a gradual recovery in fixed capital formation.
• The MPC is likely to remain focused on the inflation outlook and the pace of economic recovery. While gdp statistics for the first quarter released earlier today suggests that the economy is growing at a healthy pace, growth prospects remain clouded by considerable downside risks, while the recent rise in inflation is largely due to higher global oil and food prices, with little to no evidence of any second-round effects or demand pressures on prices. As a result, we expect the MPC to hold off on the first rate hike until early 2012.

Comment

The sharp decline in exports over the month was mainly attributed to reduced trade activity as a result of a large number of public holidays. Over the month, 19 out of the 22 major categories of exports recorded declines. The precious or semiprecious stones and mineral products categories fell by 14,2% m-o-m (up 30% y-o-y) and 6,3% (up 40,4% y-o-y) respectively. Both categories account for about 24% of total exports. Exports of basic materials were also weak in April, falling by 17,7% m-o-m and 4,1% y-o-y.

Imports were mainly boosted by mineral products which rose by 41,5% m-o-m and 61,2% y-oy. This category alone accounted for 27,3% of total imports. On the down side, imports were dragged by electrical equipment, which fell by 10,2% m-o-m (up 7% y-o-y) as well as vehicles and equipment, which dropped by 33,9% m-o-m (up 30,0% y-o-y).

On an annual basis, total exports rose by 17% in April, while imports increased by 17,5%, underpinned by improved demand conditions both locally and globally.

The cumulative trade deficit for the first four months of this year is R31,6 billion, down sharply from the R10,3 billion deficit recorded in the same period last year. ….

See the full Commentary