Nedbank Weekly Economic Monitor

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%.
• In the Eurozone, producer price inflation rose to 6,1% y-o-y in August, up from 5,9% in July.
• In Japan, unemployment rose to 4,7% from 4,6% in June, as payrolls fell by 40 000.

Domestic

The rand was pressured by the release of weaker than expected US payroll data on Friday, which increased risk aversion on worries about the US economy. However, the local unit was still firmer over the week, mainly supported by higher precious metal prices. It ended at R7,06, R9,81 and R11,42 against the US dollar, the euro and the British pound respectively, up from R7,13, R10,20 and R11,69 at the previous week’s close.

Bonds firmed in line with the rand, with yields on the benchmark R157 2015 and R186 2025 falling to 6,37% and 7,93% from 6,59% and 7,97% at the and of the previous week, while the 3-, 5- and 10-year BESA actuaries dropped to 6,10%, 6,81% and 7,70% respectively from 6,26%, 6,96% and 7,77%.

Money market rates were higher, with the 3-month JIBAR unchanged at 5,5%, while the 3-, 6-, 9- and 12-month JIBAR rose to 5,77%, 5,96% and 6,19% from 5,62%, 5,76% and 5,88% respectively.

Local equities firmed in line with higher European markets over the week. The FTSE-JSE all share index gained 3,7% to end at 30 518,9 on Friday, with industrials, basic materials and financials up by 4,4%, 3,2% and 2,7% respectively to close at 32 576,8, 27 481,7 and 21 098,3.

The economy lost momentum in the second quarter, with growth in real gdp falling to a seasonally adjusted annualised 1,3% q-o-q and 3% y-o-y from a downwardly revised 4,5% qo- q and 3,5% y-o-y in the first quarter. The main drag on growth came from manufacturing, mining and agriculture, which fell by 7% q-o-q, 4,2% q-o-q and 7,8% q-o-q respectively. Softer conditions in the domestic trade and accommodation as well as finance and real estate industries also contributed to the weaker overall performance. Construction activity remained very weak, growing by only 0,5% over the quarter, mainly reflecting the slow recovery in private sector fixed investment activity, which has been aggravated by the lull in infrastructure spending by the public sector. In contrast, real value added by general government rose sharply, contributing 0,8 percentage points to the q-o-q gdp increase, while real value added by the transport and communications industries also picked up pace, contributing 0,4% to the quarterly growth rate. …

See the full Economic Monitor