04 Oct.
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:
Although South Africa’s September PMI certainly moved in the right direction, the below-50 print in the forward-looking new sales orders component was a bit of a dampener. And with the PMI averaging 47.2 in Q3 (55.1 in Q2) we can only continue to believe that real economic activity in the manufacturing sector is likely to have remained in the doldrums (after contracting by 7.0% q/q saar in Q2). While the upcoming August and September manufacturing production prints will be key to the actual Q3 GDP growth outcome, it is at least encouraging that on average, the EEMEA PMI rebounded, inching just above its neutral level of 50. Our BarCap global PMI – capturing South Africa’s major trading partners – has also shown some stabilisation in industrial activity (though ongoing divergences remain across regions).
Market strategy: A poor day for Southern Africa FX, with the rand’s 2.3% loss against the dollar only beaten by Botswana’s 2.7% and Zambia’s 3.7% falls (and outside by Hungary’s 2.9% loss). With global equity markets in the red, and gold (+2.1%) and silver (+1.6%) the best performing financial assets on the day, the theme was clearly concern over the global economy, in particular Europe. The risk sell-off came even as US economic data surprised on the high side on Monday. US construction spending was up 1.4% m/m (against consensus of +0.2%), ISM manufacturing at 51.6 (vs consensus of 50.5), and vehicle sales at an annualised 13.04mn (12.60mn).
Locally, the snap-back in PMI was also a positive surprise. While we are cautious from reading too much into a single number, the last few data releases (PMI, credit extension, PMI) have all been a bit better than expected. We are not sure that small upside or downside surprises to the SA real economy data will be the deciding factor when it comes to the outlook for policy rates locally, however. Not when European concerns remain the elephant in the room. For the time being, we believe that it would take a disorderly outcome in Europe (rather the rising fears of such an outcome that are currently prevalent) to trigger a rate move. …
The sheets can be downloaded daily from Absa Economic Research
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