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.
April retail sales surprised to the upside, rising to 9.8% y/y against consensus of 5.0% y/y (March: +5.1% y/y). The key push here came from clothing and footwear retailers, where sales increased 22% y/y. Anecdotal evidence from the listed retailers provided an indication that clothing and footwear sales would remain strong but the extent to which it rose was even a surprise to our forecast. For May we think retail sales growth is likely to be 8.5% y/y. Though somewhat slower than April, it still reflects the more upbeat commentary from the listed retail sector in May. Last week Truworths (a local retail giant) released its annual results and, according to our equity retail analyst, reported average sales growth of 14.8% over April-May 2011.
Finally; in line with consensus we expect the SA Reserve Bank to keep the repo rate unchanged at 5.5% on Thursday. Critically, an even more uncertain global economic backdrop, together with local industrial action, should leave the SARB still cautious on economic growth prospects (and the subsequent ability of this in pushing underlying inflationary pressures higher). What’s more, global food prices have eased (leaving headline CPI surprising to the downside in many EEMEA countries), Brent crude oil and petrol prices are lower than they were before the May MPC meeting, and April and May inflation surprises offset each other. Therefore, although the SARB adopted a far more vigilant stance on inflation in May, significant inflation revisions do not look likely for the July MPC meeting. …
The sheets can be downloaded daily from Absa Economic Research
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