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Monthly forecast update - exclusive to clients

New | Forecast Update A monthly check on the forecast and latest data fact sheet, supplementing the BER’s quarterly forecast of the SA economy.

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Update: FNB/BER CCI

The 2018Q3 FNB/BER Consumer Confidence Index release date is still to be confirmed.

Recent Releases

In market news, the rand exchange rate took the Constitutional Review Committee’s decision to propose an amendment to Section 25 of the Constitution to allow expropriation without compensation (EWC) in its stride. Globally, the focus was on the chaotic Brexit negotiations. On the data front, we unpack the latest retail, wholesale and motor trade data in the domestic section. Sales came in stronger than expected across most categories. Combined with an expected improvement in agricultural output and the rebound in manufacturing output, this should help lift the economy out of recession in Q3. In the international section we discuss the latest GDP data out of Germany and Japan, along with inflation data from the US and the UK. ...Get it here

In the absence of major market-moving local data releases last week, South African financial market moves were dominated by gyrations on global markets. In the domestic section, we unpack the latest mining and manufacturing output data from Statistics South Africa (Stats SA). The September prints confirm our view that the economy likely exited the technical recession in Q3, but growth is expected to have remained weak. On the international front, the focus is on the latest monetary policy decision by the US Federal Reserve (Fed), UK GDP figures as well as the latest international trade data from China. The Chinese trade data reflected strong growth in exports, which is set to slow when additional US trade tariffs likely kick in early next year. The markets section explains the drivers of the see-sawing rand exchange rate, which managed to dip below R14/$ mid-week, but weakened again at the end of the week. ...Get it here

Various domestic economic indicators were published last week - mostly reflecting tough conditions. On the negative side, the unemployment rate increased, the trade balance swung into a deficit and the Absa PMI declined. An increase in the sale of commercial vehicles was the exception on the positive side. Internationally, preliminary indications are that the Eurozone economy continued to lose momentum in the third quarter. Meanwhile, policy makers at the central banks of Japan and the UK made no changes to their key interest rates. Lastly, in the US, nonfarm payroll data signalled a healthy labour market with rising wages, enforcing expectations for another Federal Reserve Bank (Fed) policy rate hike in December. In financial markets, the domestic equity market tracked global bourses higher to recover strongly from recent losses....Get it here

Comprehensive economic statistics handbook. The latest South African and international economic data is presented in tables and graphs. Sectoral trends are also displayed....Get it here

Graphs of the latest monthly and quarterly South African economic and financial data. The focus is on the essential indicators to give the reader a quick overview of general economic conditions....Get it here

A monthly check on the forecast and latest data fact sheet, supplementing the BER’s quarterly forecast of the SA economy...Get it here

The seasonally adjusted Absa Purchasing Managers’ Index (PMI) declined for a third consecutive month to reach 42.4 index points in October, down from 44.5 in September. This suggests that the manufacturing sector got off to a poor start in the fourth quarter of the year. Unfortunately, purchasing managers also turned more pessimistic about business conditions going forward. ...Get it here

As cautioned in the previous edition of the Weekly, the rand exchange rate and government bond yields were under pressure towards the end of last week (see markets section). This was after Finance Minister Tito Mboweni tabled his maiden Medium Term Budget Policy Statement (MTBPS) in parliament. The headline fiscal ratios showed a notable deterioration compared to the February Budget, which was negative for domestic financial markets. On a positive note, the minister’s speech candidly stipulated the steps SA needs to take in order to overcome some significant challenges. Clients can read more in our comment. Besides the MTBPS, Stats SA released the consumer and producer inflation numbers for September; read more below. Internationally, flash Purchasing Managers’ Indices (PMI) from the US and the Eurozone were published for October by Markit. These indicate that growth in the US economy is still vibrant, while the Eurozone continues to lose momentum. However, the European Central Bank (ECB) remains optimistic about the region and expects to start tightening monetary policy next year....Get it here

In April, our six-year forecast assumed greater policy certainty and direction after the 2019 election. However, recent events open the door for a more prolonged period of uncertainty about the domestic policy outlook. In line with this, the medium-term GDP growth outlook has been revised (slightly) lower....Get it here

Relative to the February Budget, the MTBPS revealed significant slippage on the fiscal consolidation with overall government debt now expected to stabilise just below 60% of GDP. ...Get it here

Forecast publications

A monthly check on the forecast and latest data fact sheet, supplementing the BER’s quarterly forecast of the SA economy...Get it here

Excel sheets summarising the forecasts published in the latest issues of Economic Prospects (2-year quarterly forecast) and Economic Outlook (6-year annual forecast). Where possible, the forecast sheets have been updated with the latest available information.

...Get it here

Excel sheets summarising the forecasts published in the latest issues of Economic Prospects (2-year quarterly forecast) and Economic Outlook (6-year annual forecast). Where possible, the forecast sheets have been updated with the latest available information.

...Get it here

In April, our six-year forecast assumed greater policy certainty and direction after the 2019 election. However, recent events open the door for a more prolonged period of uncertainty about the domestic policy outlook. In line with this, the medium-term GDP growth outlook has been revised (slightly) lower....Get it here

The domestic economy entered a technical recession in 2018Q2. The excitement that gripped the country in 2018Q1 is now firmly in the rear-view mirror. The short-run outlook for the domestic economy is clouded by low levels of private sector confidence, a subdued consumer demand environment, weak private sector fixed investment, and constrained fiscal and monetary policy. Add to that creeping concerns regarding global growth, and we are far less optimistic about the short-term outlook than in early-2018....Get it here

The domestic economy entered a technical recession in 2018Q2. The excitement that gripped the country in 2018Q1 is now firmly in the rear-view mirror. The short-run outlook for the domestic economy is clouded by low levels of private sector confidence, a subdued consumer demand environment, weak private sector fixed investment, and constrained fiscal and monetary policy. Add to that creeping concerns regarding global growth, and we are far less optimistic about the short-term outlook than in early-2018....Get it here

A monthly check on the forecast and latest data fact sheet, supplementing the BER’s quarterly forecast of the SA economy...Get it here

Medium-term prospects for the SA economy have improved. Mostly, this stems from notably less concern about domestic politics and the policy environment....Get it here

Snapshot

Graphs of the latest monthly and quarterly South African economic and financial data. The focus is on the essential indicators to give the reader a quick overview of general economic conditions....Get it here

Graphs of the latest monthly and quarterly South African economic and financial data. The focus is on the essential indicators to give the reader a quick overview of general economic conditions....Get it here

Graphs of the latest monthly and quarterly South African economic and financial data. The focus is on the essential indicators to give the reader a quick overview of general economic conditions....Get it here

Graphs of the latest monthly and quarterly South African economic and financial data. The focus is on the essential indicators to give the reader a quick overview of general economic conditions....Get it here

Graphs of the latest monthly and quarterly South African economic and financial data. The focus is on the essential indicators to give the reader a quick overview of general economic conditions....Get it here

Graphs of the latest monthly and quarterly South African economic and financial data. The focus is on the essential indicators to give the reader a quick overview of general economic conditions....Get it here

Weekly

In market news, the rand exchange rate took the Constitutional Review Committee’s decision to propose an amendment to Section 25 of the Constitution to allow expropriation without compensation (EWC) in its stride. Globally, the focus was on the chaotic Brexit negotiations. On the data front, we unpack the latest retail, wholesale and motor trade data in the domestic section. Sales came in stronger than expected across most categories. Combined with an expected improvement in agricultural output and the rebound in manufacturing output, this should help lift the economy out of recession in Q3. In the international section we discuss the latest GDP data out of Germany and Japan, along with inflation data from the US and the UK. ...Get it here

In the absence of major market-moving local data releases last week, South African financial market moves were dominated by gyrations on global markets. In the domestic section, we unpack the latest mining and manufacturing output data from Statistics South Africa (Stats SA). The September prints confirm our view that the economy likely exited the technical recession in Q3, but growth is expected to have remained weak. On the international front, the focus is on the latest monetary policy decision by the US Federal Reserve (Fed), UK GDP figures as well as the latest international trade data from China. The Chinese trade data reflected strong growth in exports, which is set to slow when additional US trade tariffs likely kick in early next year. The markets section explains the drivers of the see-sawing rand exchange rate, which managed to dip below R14/$ mid-week, but weakened again at the end of the week. ...Get it here

Various domestic economic indicators were published last week - mostly reflecting tough conditions. On the negative side, the unemployment rate increased, the trade balance swung into a deficit and the Absa PMI declined. An increase in the sale of commercial vehicles was the exception on the positive side. Internationally, preliminary indications are that the Eurozone economy continued to lose momentum in the third quarter. Meanwhile, policy makers at the central banks of Japan and the UK made no changes to their key interest rates. Lastly, in the US, nonfarm payroll data signalled a healthy labour market with rising wages, enforcing expectations for another Federal Reserve Bank (Fed) policy rate hike in December. In financial markets, the domestic equity market tracked global bourses higher to recover strongly from recent losses....Get it here

As cautioned in the previous edition of the Weekly, the rand exchange rate and government bond yields were under pressure towards the end of last week (see markets section). This was after Finance Minister Tito Mboweni tabled his maiden Medium Term Budget Policy Statement (MTBPS) in parliament. The headline fiscal ratios showed a notable deterioration compared to the February Budget, which was negative for domestic financial markets. On a positive note, the minister’s speech candidly stipulated the steps SA needs to take in order to overcome some significant challenges. Clients can read more in our comment. Besides the MTBPS, Stats SA released the consumer and producer inflation numbers for September; read more below. Internationally, flash Purchasing Managers’ Indices (PMI) from the US and the Eurozone were published for October by Markit. These indicate that growth in the US economy is still vibrant, while the Eurozone continues to lose momentum. However, the European Central Bank (ECB) remains optimistic about the region and expects to start tightening monetary policy next year....Get it here

Domestic data last week was a mixed bag. While retail and wholesale trade data for August was reasonably upbeat, mining production continued to underwhelm. On the international front, the minutes of the September Federal Open Market Committee (FOMC) revealed a somewhat more hawkish view on the future path of the policy interest rate while at the same time highlighting downside risks to growth. This week, the domestic focus will be squarely on the Medium Term Budget Policy Statement (MTBPS). Clients can expect a comprehensive overview after the event....Get it here

Domestic headlines last week were focused on the resignation of Nhlanhla Nene as finance minister and the appointment of former Reserve Bank governor Tito Mboweni as his replacement. Along with the gyrations of the US dollar, much of the local currency’s fluctuations were tied to these developments, especially with the Medium Term Budget Policy Statement (MTBPS) looming . Meanwhile, on the global data front, inflation pressure eased in the US in September. Both producer and consumer inflation recorded slower growth on an annual basis. ...Get it here

Civil contractors remain pessimistic as reflected by the FNB/BER Civil Confidence Index which, at 17, has been below 20 for more than a year.

The seasonally adjusted Absa Purchasing Managers’ Index (PMI) declined for a third consecutive month to reach 42.4 index points in October, down from 44.5 in September. This suggests that the manufacturing sector got off to a poor start in the fourth quarter of the year. Unfortunately, purchasing managers also turned more pessimistic about business conditions going forward.

Following a new president inspired jump in the RMB/BER Business Confidence Index (BCI) to 45 in the first quarter, sentiment fell back to 39 in the second quarter and 38 in the third quarter. Although confidence rose marginally in two of the five sectors covered in the survey, not a single sector in the third quarter had a number above the neutral level of 50 – an infrequent and worrying development.

After skyrocketing to an all-time high during the first quarter of 2018, the FNB/BER Consumer Confidence Index (CCI) dipped marginally in the second quarter. Since negative corrections have typically followed large spikes in the CCI in the past, we are somewhat surprised that consumer confidence levels remained so high following the unparalleled surge in consumer sentiment during the first quarter of 2018. Furthermore, there were several adverse developments in recent months that had the potential to deflate consumer confidence. Although the elevated consumer confidence level suggests that consumers remain most willing to spend their money, this does not necessarily imply that actual consumer spending remained robust during the second quarter. Household income levels and/or access to credit would have had to improve in conjunction with the positive sentiment to see strong household expenditure growth during the second quarter. Although the seeds of an economic recovery were planted with President Ramaphosa's "new dawn" and pledge to eradicate the scourge of corruption, further investor-friendly reforms are urgently needed to boost economic growth and household income levels to avoid bitter disappointment.