14 May.
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:
It is a much quieter week on the South African data calendar, with the release of Stats SA’s retail trade sales likely to generate the most amount of attention. We lie on the lower end of Bloomberg consensus forecasts (cf. 6.6%) in looking for retail sales growth to have moderated to 6.4% y/y in March from 7.2% in February.
In much the same manner as last week’s mining and manufacturing production figures, this week’s retail sales numbers will prove particularly important as they will provide us with the final piece of the puzzle in helping to determine how Q1 2012 GDP growth fared. Our “tracking estimate” of how the retail sector is likely to have contributed to Q1 12 GDP growth (scheduled for release in late May) took a turn for the worse in February, falling 0.3% on a 3m/3m seasonally adjusted and annualised basis. The last time this measure was in negative territory was in July last year. Understandably this is coming off an already high base from Q4′s robust sales performance, but we point out that in order for this sector to contribute positively to the Q1 2012 GDP print later next month, we would have to see m/m retail sales growth tick up over 5.0% in this week’s print (or alternatively see some very large upward revisions to the historical sales figures) – this is not what our forecast for March sales suggests and thus looks unlikely to materialise, in our view.
Together with last week’s extremely poor mining activity figures (mining production contracted over 20% on a q/q saar basis in Q1 owing largely to strikes and maintenance-induced production declines), this leaves us expecting a lower Q1 GDP growth trajectory after the economy grew a more robust 3.2% q/q saar in Q4 11. As we obtain more colour on how the retail sector fared in Q1 we will get a better idea of how significant this deterioration is likely to be.
Markets: The ZAR tumbled to a fresh 4-month low of 8.12 against the USD and a onemonth low of 10.50 in relation to the EUR on Friday, on the back of intensifying anxieties surrounding the EU debt crises. These anxieties revolve around whether or not the countries within the region will be able to implement the austerity measures that are needed to reduce exorbitant debt levels, especially after last week’s recent elections in Greece and France and yesterday’s state elections in Germany, which all went against pro-austerity parties.
The USD, US Treasuries and the yen remain the biggest beneficiaries of the risk-off trading environment. This morning saw the PboC announcing that as of 18th May, banks’ cash reserve requirements will be reduced by a further 50bps. This is the third time in six months that these ratios have declined and should ensure that more money is injected into the country’s financial system to help counteract the country’s slowing economic growth. Although these measures have given a boost to Asian stocks this morning, global risk appetite remains tentative so long as long as the aforementioned EU anxieties persist, and underlying global risk aversion is likely to remain elevated, which in turn suggests that high beta currencies such as the ZAR are likely to remain on the back foot, while the SA yields curve is likely to keep steepening in a bearish fashion. …
The sheets can be downloaded daily from Absa Economic Research
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