10 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:
In a relatively quiet week on the South African data calendar, the focus is likely to shift back to the supply side of the economy with the release of manufacturing (Wednesday) and mining (Thursday) production figures for August.
Following on from July’s largely strike-induced dip in manufacturing output, which saw output plummet 6.0% y/y, we expect production to return to mildly positive growth territory August, rising 1.0% y/y. Bloomberg consensus forecasts a 0.6% y/y contraction. Though on a m/m basis manufacturing production growth is likely to bounce back relatively strongly in August given the low base in production, indications from the August PMIs (showing most key PMI sub-indices remained below their neutral level of 50) suggest to us that activity in this sector remains relatively lacklustre.
Indeed taking a look at growth momentum in the manufacturing sector further supports this argument – on a 3m/3m seasonally adjusted and annualised basis, production remains deep in negative territory. Even if our forecast for a modest bounce back in August production is realised, negative momentum growth looks likely to continue in the near term. Given the manufacturing sector’s +/-15% weighting in South African GDP growth, these numbers warrant more attention in the coming weeks and will be critical in assessing our tracking estimate for Q3 GDP figures after GDP growth slowed to just 1.3% q/q saar in Q2 from 4.5% in Q1.
Markets: Going into the new week, there is plenty for global markets to digest. Sunday’s Sarkozy-Merkel press conference looks to be a step, even if small, in the right direction, as the leaders promised “by the end of the month, we will have responded to the crisis issue and to the vision issue”. And the most recent run of global macro data, including Friday’s US nonfarm payrolls, have generally surprised to the upside. Lest we sound too optimistic, it is also important to highlight rating agency moves and discussions on Italy, Portugal, Ireland, and some European banks. On balance, we would think this recent news is general …
The sheets can be downloaded daily from Absa Economic Research
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