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.
We expect a marginally stronger credit growth print than consensus of 6.4% y/y (cf. 6.3% y/y) in May, up from 6.2% in April. Mortgage advances (around 50% of PSCE) and other loans and advances (30% of PSCE) are expected to contribute the most to our forecast 0.7% m/m increase, with anecdotal evidence from the real estate market pointing to a pick up in home loan applications. Importantly, we think corporate credit will show further signs of traction, although it will remain below pre-crisis levels. Critically, household credit growth should continue to shine, providing further evidence of the economy’s uneven growth trajectory.
We look for May PPI to have ticked up to 7.3% y/y from 6.6% in April. The fundamental drivers of producer inflation, gold, platinum and oil prices (in ZAR terms) moved higher in the month, with gold and oil being the strongest performers, rising by 14.1% y/y and 39% respectively. Also, keep in mind that although the April PPI print was buoyed by the seasonal uptick in electricity tariffs, it is typical to see some of this impact trickle into the May data. This should increase pipeline price pressures.
Lastly, and in contrast to the aforementioned factors, the PMI price index moderated to 80 in May from 82.9 in April. This could have helped to mitigate some of the upward pressures stemming from commodity price gains.
Following two disappointing setbacks in the PMI, we think June numbers released on Friday could show a steadying (or slight uptick) given that many of the post-Japan earthquake ramifications should have worked their way through the manufacturing sector by now. That said, SA’s PMI does tend to drift alongside its global counterparts, therefore, these releases will also be critical to watch for any hints at to the South Africa number.
We highlight again the PMI price index, which, after rising to a high of 88 in March, moderated to 80 in May. While indicative of inflationary price pressures at the producer level, we think another step down in this index could go some way in helping to tame inflation expectations at the producer level. …
The sheets can be downloaded daily from Absa Economic Research
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