BER Weekly (2019)
BER Weekly, 15 July 2019
Last updated: Jul 15 2019 9:52AM
Last week was relatively quiet on the domestic data front. Mining and manufacturing output were mixed, but both sectors are set to recover in 2019Q2 after a poor first quarter. This should ensure a much improved GDP print in Q2.
Internationally, trade
read moreLast week was relatively quiet on the domestic data front. Mining and manufacturing output were mixed, but both sectors are set to recover in 2019Q2 after a poor first quarter. This should ensure a much improved GDP print in Q2.
Internationally, trade numbers in China are showing the effects of the trade dispute with the US, while economic growth in China slowed to the slowest rate in at least 27 years. Meanwhile, industrial output in the Eurozone picked up slightly in May, the first improvement in four months. In financial markets, the dollar remained under pressure as a July cut in the US policy interest rate seems ever more likely.
This week, the domestic economic calendar is dominated by the SA Reserve Bank’s (SARB) Monetary Policy Committee (MPC) interest rate decision on Thursday. The combination of a further deterioration in the real GDP growth outlook since the previous MPC meeting in May, continued subdued consumer inflation prints and the dovish global monetary policy tilt towards renewed stimulus should result in a 25bps interest rate reduction. This would reduce the repo rate to 6.50% and be the first policy rate drop since March 2018.
BER Weekly, 8 July 2019
Last updated: Jul 8 2019 10:20AM
During last week, the rand continued to strengthen and even dipped below R14/$ mid-week. However, the tide turned after the release of better-than-expected US nonfarm payrolls figures from the US. The jobs data is discussed in the international section, along
read moreDuring last week, the rand continued to strengthen and even dipped below R14/$ mid-week. However, the tide turned after the release of better-than-expected US nonfarm payrolls figures from the US. The jobs data is discussed in the international section, along with manufacturing Purchasing Managers’ Index (PMI) figures from Europe and the US. International PMIs – including the China PMI discussed last week - are broadly trending lower on the back of slowing new orders. This resulted in the global manufacturing PMI slumping to an almost seven-year low in June.
The domestic focus is on the latest manufacturing PMI from South Africa, as well as vehicle sales figures in what was otherwise another quiet week on the domestic data front. Both sets of data turned out weak in June.
BER Weekly, 1 July 2019
Last updated: Jul 1 2019 10:17AM
It was a fairly quiet week on the domestic data front with South African financial markets dominated by the further strengthening of the rand exchange rate. In the domestic section, we unpack the latest producer price trends, labour market developments as
read moreIt was a fairly quiet week on the domestic data front with South African financial markets dominated by the further strengthening of the rand exchange rate. In the domestic section, we unpack the latest producer price trends, labour market developments as well as May’s trade balance.
Internationally, the focus is on a variety of data releases from Europe, US, China and Japan. Inflation data from the Eurozone and US came in well below their respective central bank’s inflation targets. This supports the recent more dovish stance by both central banks. Indeed, increased bets on pending US rate cuts contributed to a weaker dollar. This provided a welcome boost to the rand.
BER Weekly, 24 June 2019
Last updated: Jun 24 2019 12:06PM
Emerging market assets, including the rand exchange rate, benefitted handsomely last week from more dovish-than-expected monetary policy outlooks from the US and European central banks. If it was not for some disappointment that President Ramaphosa’s State of
read moreEmerging market assets, including the rand exchange rate, benefitted handsomely last week from more dovish-than-expected monetary policy outlooks from the US and European central banks. If it was not for some disappointment that President Ramaphosa’s State of the Nation Address (SONA) lacked concrete details on how Eskom will be brought back to a sustainable financial position, domestic assets may have gained even more.
On the domestic data front, the case for an interest rate cut next month was bolstered by the latest consumer inflation print for May which, while somewhat up from April, remained well contained. This, as well as some initial thoughts on the SONA, is discussed in more detail here.
As mentioned, internationally the focus was on advanced country monetary policy meetings. The central banks of the US, Japan and the UK all kept their respective policy rates unchanged. However, the sentiment is becoming increasingly dovish and in the case of the US, Japan and Europe, there is a growing likelihood of an interest rate cut before the end of the year.
BER Weekly, 14 June 2019
Last updated: Jun 14 2019 11:52AM
Domestic economic data for April surprised on the upside this week, quelling fears of a technical recession (two consecutive quarterly contractions in GDP). However, business sentiment data suggests that the recovery may not be sustained throughout 2019Q2.
read moreDomestic economic data for April surprised on the upside this week, quelling fears of a technical recession (two consecutive quarterly contractions in GDP). However, business sentiment data suggests that the recovery may not be sustained throughout 2019Q2. Meanwhile, on the international front, consumer inflation data in the US continued to make a case for an interest rate cut later this year, while data from China was mixed.
BER Weekly, 10 June 2019
Last updated: Jun 10 2019 9:09AM
Domestic financial markets were rattled last week after the release of much weaker-than-expected 2019Q1 GDP figures and mixed messages from the ANC on the mandate of the SA Reserve Bank (SARB). The rand exchange rate weakened significantly through the week.
read moreDomestic financial markets were rattled last week after the release of much weaker-than-expected 2019Q1 GDP figures and mixed messages from the ANC on the mandate of the SA Reserve Bank (SARB). The rand exchange rate weakened significantly through the week. Incoming data for the second quarter, including vehicle sales and the Absa Purchasing Managers’ Index (PMI) figures, do not inspire confidence in a strong bounce-back in Q2 GDP. Combined, the weak data necessitated a downward adjustment to our outlook for full-year real GDP growth. On the international front we discuss the dovish turn in international monetary policy, with reference to interest rate decisions from across the globe.
BER Weekly, 3 June 2019
Last updated: Jun 3 2019 9:09AM
Last week, domestic market focus was on SA political developments as President Cyril Ramaphosa announced his cabinet on Wednesday evening. The cabinet was generally well received, but we remain sceptical as to the willingness and ability of the new cabinet to
read moreLast week, domestic market focus was on SA political developments as President Cyril Ramaphosa announced his cabinet on Wednesday evening. The cabinet was generally well received, but we remain sceptical as to the willingness and ability of the new cabinet to deliver pro-growth policy reforms. In other domestic news, we unpack the latest FNB/BER Consumer Confidence Index (CCI), producer price inflation and trade statistics. On the international front, data releases from the US, Europe and China take centre stage.
BER Weekly, 27 May 2019
Last updated: May 27 2019 7:49AM
The key domestic event last week was the MPC decision on the policy interest rate. As expected, the rate was kept unchanged, but with a more dovish bias.
BER Weekly, 20 May 2019
Last updated: May 20 2019 11:37AM
Domestic data released last week confirmed that SA GDP most likely contracted in the first quarter, the question is how large the decline will be. The unemployment rate increased in 2019Q1, with notable job losses in the formal sector of the economy, while
read moreDomestic data released last week confirmed that SA GDP most likely contracted in the first quarter, the question is how large the decline will be. The unemployment rate increased in 2019Q1, with notable job losses in the formal sector of the economy, while retail, wholesale and motor sales all contracted in the first quarter.
Internationally, indications are that economic growth is also slowing down in China, while Germany experienced a slight rebound. The trade dispute between the US and China is partly to blame for China’s woes and given the current tension, could escalate and have more dire consequences. On the political front, populist parties are expected to gain more seats in the EU parliamentary elections this week. Meanwhile, in financial markets, currencies and share prices were also affected by the US-China trade tensions.
BER Weekly, 13 May 2019
Last updated: May 13 2019 11:40AM
The key event over the past week was the national and provincial election on 8 May. The results point to relative stability and are unpacked in the current affairs section below. Generally, the election outcome was welcomed by the markets. However, this more
read moreThe key event over the past week was the national and provincial election on 8 May. The results point to relative stability and are unpacked in the current affairs section below. Generally, the election outcome was welcomed by the markets. However, this more positive sentiment was to some extent overshadowed by a further escalation of the trade tension between the US and China. As such, in the international section, the focus is on recent trade data from China and the US. The data is against the backdrop of scheduled trade negotiations between the two countries that took place last week. Talks continued despite the US imposing even higher tariffs on Chinese goods from Friday and China stating it would implement the “necessary countermeasures” in return.
Finally, domestic activity data for March surprised on the upside, but still suggests that the economy is likely to contract sharply in 2019Q1.
BER Weekly, 6 May 2019
Last updated: May 6 2019 11:33AM
Awaiting Wednesday’s election with bated breath, we briefly unpack the latest poll results and possible implications of the vote outcome in the current affairs section below.
On the data front, local vehicle sales and factory activity data showed an
read moreAwaiting Wednesday’s election with bated breath, we briefly unpack the latest poll results and possible implications of the vote outcome in the current affairs section below.
On the data front, local vehicle sales and factory activity data showed an improvement in April. This is a welcome development as all signs are that the economy will contract quite steeply in the first quarter of 2019. The international section looks at the US nonfarm payroll data, Eurozone growth figures as well as monetary policy decisions in the US and UK.
BER Weekly, 29 April 2019
Last updated: Apr 29 2019 11:08AM
It was a quiet week on the domestic data front with the main release being the 2019Q1 FNB/BER Consumer Confidence Index. After remaining elevated for most of last year, consumer confidence fell back to its long-term average in 2019Q1. This was underpinned by
read moreIt was a quiet week on the domestic data front with the main release being the 2019Q1 FNB/BER Consumer Confidence Index. After remaining elevated for most of last year, consumer confidence fell back to its long-term average in 2019Q1. This was underpinned by a change in consumers’ take on the prospects for the South African economy over the next year. Internationally, while US GDP growth for the first quarter of 2019 beat expectations, the German economy continues to cool.
BER Weekly, 18 April 2019
Last updated: Apr 18 2019 2:26PM
Despite the shorter week, there was still some domestic data to digest, namely consumer inflation and retail sales. While inflation moved in line with the consensus predictions (albeit lower than our expectation), the outcome for retail sales beat
read moreDespite the shorter week, there was still some domestic data to digest, namely consumer inflation and retail sales. While inflation moved in line with the consensus predictions (albeit lower than our expectation), the outcome for retail sales beat expectations. Nonetheless, growth in retail sales remains weak and although the March data is still outstanding, the broader internal trade category will likely be a drag on 2019Q1 GDP. On the international front, the latest US trade performance and Chinese data (including 2019Q1 GDP growth) largely fared better than expected.
BER Weekly, 15 April 2019
Last updated: Apr 15 2019 11:33AM
On the domestic front, incoming data for 2019Q1 continues to disappoint. The latest mining and manufacturing output data suggest that GDP growth could slow notably in Q1, with a contraction looking increasingly likely. The rand ignored the raft of
read moreOn the domestic front, incoming data for 2019Q1 continues to disappoint. The latest mining and manufacturing output data suggest that GDP growth could slow notably in Q1, with a contraction looking increasingly likely. The rand ignored the raft of disappointing domestic data, strengthening to below R14/$ - more on this in the Markets section. In international news, the European Central Bank (ECB) stuck with its current accommodative monetary policy stance, suggesting that further stimulus might be on the cards should growth remain subdued. We also unpack inflation data from the US and China, as well as the latest Chinese trade statistics.
BER Weekly, 8 April 2019
Last updated: Apr 8 2019 12:15PM
Last week, financial markets continued to digest the ratings reprieve offered by Moody’s, with the rand ending up a clear winner – the domestic unit strengthened by almost 3% against most major currencies. Domestic data releases, however, suggest that real
read moreLast week, financial markets continued to digest the ratings reprieve offered by Moody’s, with the rand ending up a clear winner – the domestic unit strengthened by almost 3% against most major currencies. Domestic data releases, however, suggest that real economic activity remains in the doldrums, with new passenger car sales and the Absa Purchasing Managers’ Index (PMI) painting a gloomy picture. On the international front, the latest data shows that the US economy continues to chug along at a healthy pace. In contrast, growth appears to be slowing in the UK and the Eurozone (EZ). This week, all eyes will once again be on the ongoing Brexit negotiations. It remains to be seen whether UK lawmakers can agree on a Brexit deal before the current departure date, set for 12 April.
BER Weekly, 1 April 2019
Last updated: Apr 1 2019 11:34AM
Against the general expectation, but as was the case in late 2018, Moody’s credit agency again decided to skip (as they are entitled to do) a scheduled pronouncement on SA’s sovereign credit rating on Friday. This implies that the rating remains at one notch
read moreAgainst the general expectation, but as was the case in late 2018, Moody’s credit agency again decided to skip (as they are entitled to do) a scheduled pronouncement on SA’s sovereign credit rating on Friday. This implies that the rating remains at one notch above sub-investment grade, with a stable outlook. Domestic financial markets responded positively to the news this morning (see markets section). Although Moody’s reprieve is cause for relief, the current environment of weak SA real GDP growth and numerous fiscal risks (illustrated again last week by Sanral’s decision to ‘temporary’ suspend e-toll summonses) suggest that the risk of a rating outlook change and ultimately a credit downgrade will remain in the foreseeable future.
Before the Moody’s decision, the Monetary Policy Committee (MPC) decided to keep the repo rate unchanged. Other domestic news included an acceleration in producer inflation, an improvement in employment numbers and a modest trade surplus in February.
Internationally, the US reported a smaller trade deficit in January, while trade negotiations with China resumed last Thursday. In China, purchasing managers’ indices (PMIs) ticked up above the neutral-50 mark, while in Britain no progress has been made on the way forward regarding Brexit.
BER Weekly, 25 March 2019
Last updated: Mar 25 2019 10:22AM
Last week, financial markets were surprised by a more dovish-than-expected monetary policy statement from the Federal Reserve (Fed) in the US. In response, a section of the US yield curve inverted. As expected, the Bank of England (BoE) also held its policy
read moreLast week, financial markets were surprised by a more dovish-than-expected monetary policy statement from the Federal Reserve (Fed) in the US. In response, a section of the US yield curve inverted. As expected, the Bank of England (BoE) also held its policy rate unchanged. Besides monetary policy, flash PMI data from key economies continue to point towards a slowdown in global growth.
Domestically, the consumer and trade sector came into focus. In February, headline consumer inflation remained safely below the 4.5% midpoint of the target range. In the trade sector, real retail and wholesale sales improved marginally in January. However, nominal sales were not much higher, an indication that trade inflation was running below headline consumer inflation at the start of this year. In the week ahead, news will be dominated by Moody’s judgement of the SA economy on Friday. Read more in the current affairs section.
BER Weekly, 18 March 2019
Last updated: Mar 18 2019 11:21AM
Domestic economic data released last week indicates that growth momentum remained poor at the start of the year. In the domestic section, we discuss the latest reading for the RMB/BER Business Confidence Index (BCI), along with mining and manufacturing output
read moreDomestic economic data released last week indicates that growth momentum remained poor at the start of the year. In the domestic section, we discuss the latest reading for the RMB/BER Business Confidence Index (BCI), along with mining and manufacturing output for January. On the international front, we briefly discuss the latest Brexit developments, as well as activity data out of China and inflation figures from the US.
BER Weekly, 11 March 2019
Last updated: Mar 11 2019 10:17AM
Last week, domestic growth and current account data for 2018Q4 came out better than expected. Despite this, the rand exchange rate was under pressure amid a stronger US dollar and market concerns after President Ramaphosa reiterated in Parliament that the SA
read moreLast week, domestic growth and current account data for 2018Q4 came out better than expected. Despite this, the rand exchange rate was under pressure amid a stronger US dollar and market concerns after President Ramaphosa reiterated in Parliament that the SA Reserve Bank (SARB) will be nationalised. The economy expanded by 1.4% q-o-q (seasonally adjusted and annualised, saar) in Q4, bringing full year growth to 0.8% in 2018. The current account deficit narrowed in Q4, but still widened for the full year. In the international section, we unpack the latest trade data from China, a monetary policy announcement from Europe as well as employment figures from the US.
BER Weekly, 4 March 2019
Last updated: Mar 4 2019 11:16AM
Global stock markets were boosted early last week by the news that US President Trump granted China another reprieve on possible further import tariff hikes. At the start of this week, further optimism on this front continued to boost markets. On the domestic
read moreGlobal stock markets were boosted early last week by the news that US President Trump granted China another reprieve on possible further import tariff hikes. At the start of this week, further optimism on this front continued to boost markets. On the domestic data front, after recording a solid surplus in December, SA’s trade balance moved back into deficit territory in January on the back of a decline in exports. However, vehicle export data suggests that the trade balance may improve in February. In international news, 2018Q4 US GDP growth was better than expected, supported by still robust consumer and business spending. In all, 2018 marked the fastest growth since 2015. In contrast, the latest PMI data for China points to a continued slowdown in the world’s second biggest economy.
BER Weekly, 25 February 2019
Last updated: Feb 25 2019 11:01AM
Domestically, attention was focused on the Budget, in particular the extent to which government would provide financial assistance to Eskom. In the end, the Treasury managed to limit the fiscal slippage of an Eskom cash injection through non-Eskom expenditure
read moreDomestically, attention was focused on the Budget, in particular the extent to which government would provide financial assistance to Eskom. In the end, the Treasury managed to limit the fiscal slippage of an Eskom cash injection through non-Eskom expenditure cuts and R15bn worth of tax hikes. In other domestic news, consumer inflation for January surprised on the downside, rising by the slowest pace in almost a year. Internationally, the slowdown in the manufacturing sector continued into February in most major economies. This is according to the latest flash PMI data, and reaffirms the view that global growth is coming under increased strain.
BER Weekly, 18 February 2019
Last updated: Feb 18 2019 10:06AM
There was a slew of data releases last week, both on the domestic and international front. Domestic releases focused on real economic data for December 2018, all but completing the picture for 2018Q4 GDP. In financial markets, the rand lost further ground
read moreThere was a slew of data releases last week, both on the domestic and international front. Domestic releases focused on real economic data for December 2018, all but completing the picture for 2018Q4 GDP. In financial markets, the rand lost further ground last week on the back of a strong US dollar and the return of load shedding. On the international front, we turn to inflation figures from around the globe as well as trade data out of China.
BER Weekly, 11 February 2019
Last updated: Feb 11 2019 9:39AM
The domestic data calendar was rather light last week with electricity production for December 2018 the only notable release. In the absence of any significant data releases, attention was focused on the State of the Nation Address (SONA) and the
read moreThe domestic data calendar was rather light last week with electricity production for December 2018 the only notable release. In the absence of any significant data releases, attention was focused on the State of the Nation Address (SONA) and the announcements made regarding Eskom and the formation of a new investigating directorate. In the international section, we discuss the latest interest rate decisions from both the developed and developing world, as well as trade statistics out of the US.
BER Weekly, 4 February 2019
Last updated: Feb 4 2019 10:41AM
Last week, financial headlines were dominated by a more dovish-than-expected monetary policy statement of the Federal Reserve (Fed) in the US. The dollar lost some ground against other key currencies, including the rand, after the statement lacked the usual
read moreLast week, financial headlines were dominated by a more dovish-than-expected monetary policy statement of the Federal Reserve (Fed) in the US. The dollar lost some ground against other key currencies, including the rand, after the statement lacked the usual prediction of future rate hikes.
Domestically, there were a number of data releases. Although the Absa Purchasing Managers’ Index (PMI) was slightly down in January, it was still virtually at the neutral-50 mark and above the average for last year. Besides the PMI, a welcome trade surplus was recorded in December, though it was not on the back of more exports. We also take a brief look at the latest vehicle sales, private credit extension and producer inflation numbers.
In terms of the main global data releases, a slowdown in global growth was confirmed by lower GDP growth numbers in the Eurozone and a drop in the Chinese PMI.
BER Weekly, 28 January 2019
Last updated: Jan 28 2019 11:36AM
Domestically, data released last week revealed that consumer confidence remained in positive territory in the final quarter of last year, though it was down from the Ramaphoria-high during the first half of 2018. The Q4 figure suggests that consumers’
read moreDomestically, data released last week revealed that consumer confidence remained in positive territory in the final quarter of last year, though it was down from the Ramaphoria-high during the first half of 2018. The Q4 figure suggests that consumers’ willingness to spend is still relatively high. Meanwhile, consumer inflation moderated significantly in December 2018 on the back of a huge drop in fuel prices.
Internationally, both the European Central Bank (ECB) and the Bank of Japan (BoJ) held their key policy interest rates steady at current levels. Meanwhile, flash Purchasing Managers’ Index (PMI) numbers for January indicated a sustained slowdown in the Eurozone economy, while the US economy retained momentum. In financial markets, the US dollar was somewhat weaker as the trade talks between the US and China made little progress to date
BER Weekly, 21 January
Last updated: Jan 21 2019 11:01AM
Domestically, markets were focused on the latest meeting of the Monetary Policy Committee (MPC) of the SA Reserve Bank (SARB) last week. On the global front, the news flow was dominated by British political chaos associated with the Brexit debacle. Besides a
read moreDomestically, markets were focused on the latest meeting of the Monetary Policy Committee (MPC) of the SA Reserve Bank (SARB) last week. On the global front, the news flow was dominated by British political chaos associated with the Brexit debacle. Besides a brief overview of the MPC decision, the domestic section looks at the latest retail sales data, which surprised on the upside. In contrast, mining data disappointed.
The international section discusses a slew of data from China, the US and the Eurozone. The section also briefly refers to the outcome of the Brexit vote in the UK parliament.
BER Weekly, 14 January
Last updated: Jan 14 2019 9:59AM
Domestic data released during the first full week of 2019 presented a mixed bag. Manufacturing data, both survey and official statistics, suggest that the factory sector ended 2018 on a positive note. However, new vehicle sales data for December confirmed
read moreDomestic data released during the first full week of 2019 presented a mixed bag. Manufacturing data, both survey and official statistics, suggest that the factory sector ended 2018 on a positive note. However, new vehicle sales data for December confirmed that overall sales declined in 2018 compared to 2017.
International news headlines were mostly focused on political developments, including the continued government shutdown in the US, trade negotiations between the US and China, as well as Brexit developments (or the lack thereof). On the economic front, there are increasing concerns about the health of the global economy.