Data likely to confirm suppressed economic activity

30 August 2015 - 14:59 By Rdm News Wire

This week sees the release of a slew of local economic data which economists believe is likely to confirm suppressed economic activity. Monday sees the release of the country’s trade balance as well as money supply and private sector credit data‚ all for the month of July.Investec economist Kamilla Kaplan says there is scope for the magnitude of the trade deficit to have narrowed in July to R1.3bn from a prior R5.8bn.“The trade account typically records a sizeable increase in imports in the month of July. Growth in imports should however be contained by the steady decline in international oil prices‚ which average USD52/bbl in July compared to an average of US$65/bbl in Q2.15.“Relatively soft domestic consumption and investment demand should also keep import growth in check. Export growth is at risk of underperforming in line with the broad downturn in global trade‚” Kaplan says. Private sector credit extension growth‚ she adds‚ may have moderated slightly to 8.0% year on year in July from 8.1% year on year in June.“Credit extension to both households and corporates is at risk of having eased given depressed business and consumer confidence and a particularly weak economic growth backdrop in a rising interest rate environment.”The generally weak global trade dynamics‚ Kaplan says‚ are also likely to be reflected in the SA manufacturing PMI survey for August‚ which is due for release on Tuesday.“Specifically‚ the July global PMI showed that the global economy started the third quarter on a softer footing with new export orders contracting. Compounding the effects of the challenging global economic backdrop are local electricity supply constraints‚ high operating costs‚ weakening momentum in domestic consumption expenditure and suppressed activity in the allied mining industry. The PMI for August is expected to have remained relatively unchanged at around the 51 mark‚” Kaplan says.Also due for release on Tuesday are the new vehicle sales figures for August. Kaplan notes that the decrease in the rate of credit granted for new vehicle purchases also continues to slow.“Specifically‚ growth in household vehicle finance‚ eased to 3.4% year on year in June from double digit rates last seen in the first quarter of 2014. This has contributed to the contraction in the growth of new car sales in every consecutive month since March 2015.“The outlook for the domestic new vehicle sales market is likely to remain weak as consumers delay purchases of big-ticket items at a time when employment prospects are uncertain‚ the cost of living has increased and debt servicing costs are rising‚” Kaplan .Thursday sees the release of the Standard Bank August PMI as well as the August SACCI Business Confidence Index and electricity consumption and production data for July...

There’s never been a more important time to support independent media.

From World War 1 to present-day cosmopolitan South Africa and beyond, the Sunday Times has been a pillar in covering the stories that matter to you.

For just R80 you can become a premium member (digital access) and support a publication that has played an important political and social role in South Africa for over a century of Sundays. You can cancel anytime.

Already subscribed? Sign in below.



Questions or problems? Email helpdesk@timeslive.co.za or call 0860 52 52 00.