17 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:
The focus on the South African data calendar this week turns to the release of consumer price inflation and retail sales numbers, which are both scheduled for release on Wednesday. We forecast headline CPI to rise 5.7% y/y in September (5.3% in August), in line with Bloomberg consensus forecasts. The usual exogenous culprits – food and transport prices – are expected to account for just under half (0.2pp) of our forecasted monthly increase of 0.5ppt while the quarterly price survey in housing should add a further 0.2pp. Price surveys in public transport fees and domestic worker wages should add to the final 0.1pp contribution. We forecast core inflation to rise to 4.0% y/y (prior: 3.8%) as second-round inflationary effects filter through to headline inflation. Inflation is rising but even so, we would not expect markets to be perturbed by even an above-consensus print. This is because in our view, policy rate decisions (and the risk of a rate cut) hang largely on potential downside risks to the economic growth trajectory.
Base effects are expected to have pushed retail sales growth to 6.3% y/y in August (2.8% y/y previously). Critically, however, 3m/3m saar growth looks set to print relatively well in positive territory (above 2% by our calculations), which is encouraging given that the July print fell by 2.6% 3m/3m saar. Year-on-year base effects are relatively strong given the fall off in August 2010 sales following the Soccer World Cup and as a result, clothing and footwear and general dealers are expected to contribute the most to our forecast headline 6.3% y/y growth.
Markets: If the world can settle down a bit, the South African data calendar is quite interesting this week, with both CPI and retail sales out Wednesday. For monetary policy, we think it will be the latter that is the more relevant as we believe that it will be the real economy, both local and global, that will be the swing factor for rate expectations. An August retail sales print near the 5.2% y/y consensus (not to mention our forecast of 6.3%) would give us comfort for our “on hold for a long time” rate call. Given the generally more positive take from weekend developments around Europe, we look for a stronger rand this week, Tuesday’s bond auction to find better sponsorship and for the local curve to flatten. …
The sheets can be downloaded daily from Absa Economic Research
Discussion
Comments are closed.