Nedbank Weekly Economic Monitor

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.

Comment

News that the Competition Tribunal had approved the $2,4 billion merger deal between Walmart and Massmart Holding supported the rand last week, while softer US dollar on some weaker than expected economic data also contributed. The local unit closed at R6,71, R9,82 and R11,02 against the US dollar, the euro and the British pound on Friday, up from R6,92, R9,91 and R11,43 at the previous week’s close respectively.

Bonds were mixed, with the yields on the benchmark R157 2015 and the R186 2025 declining to 7,42% and 8,39% at the end of the week from 7,47% and 8,46%, the 3- and 5- year BESA actuaries increased to 6,97% and 7,62% from 6,94% and 7,60%, while the 10- year BESA actuaries eased to 8,21% from 8,27%.

Money market rates were generally steady, with the 3- and 9-month JIBAR unchanged at 5,50% and 6,06% respectively, while the 12-month JIBAR edged down slightly to 6,29% from 6,30% and the 6-month JIBAR eased to 5,78% from 5,81%.

Local equities ended lower on Friday, dragged down by weaker international markets on continued worries about global recovery. The FTSE-JSE all share index lost 2,5% to close at 31 575,7. Basic material dropped 4,2% to end at 29 561,6, with the gold and platinum indices down by 2,2% and 1,5% respectively. Financials and industrials were also down, falling by 1,7% and 0,9% respectively to close at 21 478,2 and 32 835,4.

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 manufacturing sector provided the main boost, but domestic trade and accommodation, finance and real estate as well as transport and communications also contributed. Real value added by manufacturing rose at an annual rate of 14,5% q-o-q. The large export-orientated producers upped production substantially in the first quarter to take advantage of strong global demand and high commodity prices. In contrast, growth in real value added by mining slowed sharply off the high base set in the previous quarter while a disappointing field crop season dragged real value added by agriculture down by a seasonally adjusted annualised 2,6% over the quarter….

See the full monitor at Weekly Economic Monitor