16 Apr.
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:
The key focus for South African markets this week will be the release of consumer prices and retail sales on Wednesday. We have an above-consensus forecast of 6.2% y/y for March CPI inflation (cf. 6.0% y/y), following a downside surprise of 6.1% in February. From a technical point of view, rounding leaves us attaching more downside risk to our forecast. At two decimal places, our forecast is 6.15% y/y; it would take less downside pressure to push it to 6.14% than upside pressure to push it to 6.25% y/y. Nevertheless, an upside or downside surprise to our forecast should not change the major contributions to the monthly increase in inflation. Food is once again expected to contribute the most, and the 28-cents/litre fuel price hike in March will add to monthly inflation. In line with our expectation that inflationary pressures are becoming more broad based, we expect core CPI to rise slightly to 4.4% y/y from 4.3% in February.
We forecast February retail sales will rise 4.8% y/y, up from 3.9% y/y in January. In line with the recently released Q4 11Quarterly Bulletin, growth momentum in durables and semi-durables is expected to have continued into Q1 12. Retail sales for textiles, clothing, footwear; and furniture, appliances and equipment have proved the strongest over the past 12 months and once again, these two categories are expected to be the drivers behind February sales.
Markets: Friday’s softer-than-expected Chinese GDP data, combined with the release of some benign US consumer inflation data and a disappointing Michigan consumer sentiment reading, ensured that risk assets incurred a fresh wave of selling pressure into the weekend. European sovereign debt concerns surrounding Spain also regained momentum on Friday, and these fears have accelerated this morning, which has seen participants scurry even further for safe-haven assets such as US Treasuries, the USD and the JPY. Gold is not rallying, which could be a function of the stronger USD environment, but most Asian markets are down over 1% on the day. Hence, it is hardly surprising that the ZAR is on the back foot this morning, thereby ensuring that it is getting closer to last week’s three-month low of 8.05/USD. If this afternoon’s US retail sales data prove disappointing, then extended ZAR weakness is likely, but we are not expecting a weak outcome. This implies that ZAR weakness could be contained around current levels unless there is more bad news on the European debt front ahead of this week’s World Bank and IMF meetings. Although the CNY is weaker this morning, we suspect that the recent decision by Chinese authorities to liberalise the trading band for the currency will be conducive to a firmer CNY, which could bode well for SA exports given the increased buying power that would accompany such an appreciation. …
The sheets can be downloaded daily from Absa Economic Research
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