26 Sep.
Absa: SA Morning Sheet.
This is a daily economic comment …
The sheets can be downloaded daily from Absa Economic Research
An extract from today’s sheet is provided as an example:
A lighter week on the South African data calendar sees the release of private sector credit growth and producer price inflation figures on Thursday, and trade balance figures on Friday. We expect credit growth to slow to 5.3% y/y in August from 5.6% in July. At 30% of overall private sector credit extension, we expect the “other loans and advances” category to be the biggest push to overall credit growth in August. We refer to this as “discretionary credit”, as it includes credit cards, overdrafts and personal loans, whereas our calculation of “asset-backed credit” comprises mortgage advances, instalment sales and leasing finance. Over recent months, there has been a notable rise in the extension of discretionary credit (21.4% y/y in July), and looking at flows, discretionary credit extension is in fact taking up a far larger piece of the overall credit pie. This is in line with consumer spending on semi-durable goods holding up in Q2.
We look for PPI to track largely sideways at 8.7% y/y in August (8.9% y/y in July). A slowdown in the August PMI price index, together with a lower oil price in ZAR terms during the month, should contribute to keeping overall y/y growth down, although upside price pressures are expected to show in the form of electricity prices (some tariff increases pushed through to August), while many commodity prices accelerated further during the month. All this should leave PPI rising by 0.2% m/m. While PPI is often overlooked by the markets, it may prove a useful indication of ZAR pass-through (at least to the mining and agricultural sectors) over the next two months. This would then set the ball rolling on how recent ZAR weakness could affect the consumer inflation trajectory over the medium-term.
Markets: With most global policymakers and much of the world’s fund management community focused on DC over the weekend, it was inevitable that stories would emerge favouring both sides of the will/won’t new measures be announced to help address the European debt crisis. At a minimum, it is possible to say that headlines out of Europe, focused nominally on the country-by-country passage of the new EFSF legislation but really looking for broader solutions than that, will be the key global focus in the days ahead. …
The sheets can be downloaded daily from Absa Economic Research
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