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This week was marked by heightened tensions both domestically and internationally. At home, friction intensified between the two largest parties in the Government of National Unity (GNU), the ANC and the DA, as public disagreements resurfaced. The DA later said that the dismissal stemmed from Whitfield's participation in a DA-led trip to Washington, undertaken without presidential approval. However, the party claims Whitfield had written to the President beforehand and received no response. After offering an apology, he still received no official reply until his sudden removal months later.
Addressing parliament on Thursday, DA leader John Steenhuisen criticised what he called a double standard, pointing out the President’s swift action against Whitfield compared with continued inaction toward ANC ministers implicated in misconduct. The DA has now issued an ultimatum, demanding that the ANC dismiss all ministers and deputy ministers linked to corruption within 48 hours or face “grave consequences.” While this is the latest flashpoint in a tense relationship, the parties have found common ground before.
While US President Donald Trump was reportedly still deciding whether to intervene in the Iran-Israel war by the time of the previous Weekly, the US launched strikes on three Iranian nuclear facilities using bunker-busting bombs a mere two days later. The US claims Sunday’s attacks have destroyed Iran’s nuclear capabilities, although the actual extent of the damage remains unclear. Iran vowed retaliation, with officials even threatening to close the Strait of Hormuz, a key route for 25% of global crude oil transport. Markets reacted swiftly on Monday, switching to risk-off mode with the US dollar and gold benefitting, while Brent crude briefly surpassed $80 per barrel. Ultimately, Iran’s response was a limited, pre-announced missile strike on US bases in Qatar, which caused no casualties or significant damage. The measured retaliation helped stabilise markets, and Trump’s announcement of a ceasefire between Iran and Israel (despite ongoing missile exchanges at the time) led to a sharp decline in oil prices and a 2% drop in gold by Tuesday.
Elsewhere, the focus was also on defence. Canada and the European Union signed a new defence pact, with Canada set to gain access to the EU’s €150 billion ($174 billion) defence fund. Meanwhile, leaders agreed to increase defence spending to 5% of GDP at the NATO summit in The Hague, split between 3.5% for core defence and 1.5% for related areas, meeting Trump’s long-standing demand. The summit’s five-point statement cited both Trump’s pressure and escalating threats from Russia as key drivers of the decision. While most allies supported the move, Spanish Prime Minister Pedro Sánchez insisted his country could meet NATO commitments with less spending, prompting Trump to threaten harsher US trade terms for Spain.
Increased defence spending will require budget reallocations for many countries, and in some cases, it could have significant political implications. In the UK, Prime Minister Keir Starmer is facing a rebellion within his party over proposed welfare cuts of more than £5 bn by 2029/30. Over 100 Labour MPs back an amendment to block the reforms, citing insufficient support for disabled and chronically ill citizens. Despite the backlash, Starmer remains firm in his leadership ambitions, pledging to lead Labour into the next general election. However, if he fails to unify his party, he risks becoming yet another short-lived prime minister in the UK’s recent cycle of political instability.
Although there were no major monetary policy meetings this week, we received numerous comments from central bankers, although much of it was more of the same. US Federal Reserve (Fed) officials shared mixed but cautiously optimistic views on potential rate cuts. During his testimony before the Senate Banking Committee, Fed Chair Jerome Powell said a cut could occur “sooner rather than later” if inflation remains controlled, but emphasised there’s no urgency. Currently, markets expect a 25bps cut in September. Meanwhile, two senior Bank of England (BoE) officials suggested rate cuts may come later this summer due to a weakening labour market and easing wage pressures. In contrast, in Japan, a board member of the Bank of Japan, Naoki Tamura, warned that rate hikes may be needed if inflation risks rise, despite continued economic uncertainty.
The US attack and limited Iranian response meant that it was a volatile week in financial markets. Ultimately, many assets reverted to pre-strike levels, and in some cases, markets displayed even more risk-taking behaviour than before. After briefly strengthening at the start of the week, the US dollar was trading about 2% weaker yesterday after Trump said he might announce Powell’s successor earlier than expected. For the SA rand, this meant a 2.0% appreciation against the greenback this week and minimal change against the UK pound sterling and euro. SA treasuries benefitted from improved sentiments; the 10-year government bond yield dropped by 19bps. Renewed jitters about the GNU may turn this around today.
Global stock markets rallied in the latter part of the week. The JSE All Share was also up, albeit by a smaller magnitude compared to most global counterparts. In commodity markets, the alleviation of supply risk caused the Brent crude oil price to drop by almost 18% w-o-w. Prior to the 12-day Iran-Israel war, prevailing expectations were for a supply surplus this year amid weak demand and rising OPEC+ production. Once the Strait of Hormuz closure threat was largely removed, markets reverted to pricing in this surplus.
Meanwhile, the gold price declined by 1.3% this week as market tensions eased and calm returned. Despite gold trading steadily between $3 300 and $3 400 per ounce in recent weeks, the lack of upward movement doesn't signal a retreat from safe-haven assets. In fact, investors have turned to other precious metals, with platinum standing out. Platinum prices surged by 9% this week alone. In addition to supply and demand fundamentals, this is partly driven by its relative affordability compared to gold, making it an increasingly attractive alternative for investors.
It is a busy week for domestic and international economic data. On Tuesday, SA will see the release of the Absa Manufacturing PMI for June, which has remained in contractionary territory (below 50) for seven consecutive months. Encouragingly, business activity and new sales orders indices in May, though, remained below the 50-point mark. Also on Tuesday, naamsa will publish June vehicle sales data. New vehicle sales have been strong this year, and June sales may have benefitted from the SARB’s interest rate cut in late May and the recovery in the FNB/BER Consumer Confidence Index (a good indicator of consumers’ willingness to spend) in Q2.
On Wednesday, attention will turn to the BER inflation expectations survey for Q2, an important indicator for the Reserve Bank. The SARB has spoken about its preference to lower its inflation target to 3%, and a decline in inflation expectations would aid in achieving that goal. Finally, the SP Global PMI for SA, which considers the broader private sector, is also out this week.
Internationally, final manufacturing PMIs from China, the US, and the UK are due on Monday, followed by their composite PMIs later in the week. The Chinese figures will be scrutinised in particular as there is no flash/preliminary figure available and markets will be keen to see whether there was some recovery after trade tension with the US eased somewhat during the month. Tuesday brings June’s flash consumer inflation data in the eurozone, with unemployment figures on Wednesday and producer inflation on Friday. Lastly, the US Bureau of Labour Statistics will release June’s unemployment data. While official figures continue to show a strong labour market, soft data suggests employment is taking strain.
There will also be keen interest in Trump’s promised letters of new reciprocal tariffs to individual countries, which were promised earlier this month. Although the Iran-Israel war and the US intervention may have been a distraction and caused a delay, the 90-day reciprocal tariff pause ends on 8 July, so markets will hope for clarity before the deadline.
Roy Havemann, with Julia Iles
Energy supply remains carefully balanced, with a risk of load-shedding remaining, particularly given severe weather conditions. The energy availability factor (EAF) has fluctuated between 55% and 62% this year, largely below the 2021, 2022 and 2024 readings. Unplanned outages are 6% pts higher than the same time last year. These may be reduced if Medupi Unit 4 and Koeberg Unit 1 return to service shortly as planned.
In policy moves, earlier this month, the government mandated IE3-standard energy-efficient motors for industrial use, aiming to save 840 GWh annually and ease pressure on the grid. In the tech space, digitalisation is driving growth in decentralised energy, with startups like Open Access Energy and Wetility enabling AI-powered trading, metering, and rooftop solar installations.
Meanwhile, Transnet National Ports Authority (TNPA) has announced progress on a R2.5-bn back-of-port facility in Cape Town to address congestion and space limitations at the port. The 30-hectare Culemborg Internal Logistics Precinct will include transport and warehouse infrastructure, with construction expected to create over 2,500 direct jobs and 25,000 indirect ones. Eviction of illegal occupants and site preparation are scheduled for this year, while stakeholder engagement continues.
Meanwhile, the National Treasury announced that SA has secured a $1.5 bn loan from the World Bank to enhance transport and energy infrastructure and foster economic growth. Although specific projects have not been detailed, the government aims to alleviate transport bottlenecks and improve energy security. The 16-year loan includes a three-year grace period and offers more favourable terms than commercial borrowing.
There have been further discussions on black economic empowerment reforms. President Ramaphosa noted on Wednesday that the Department of Trade, Industry and Competition is considering a review of broad-based black economic empowerment measures to align with government priorities of ensuring industrialisation, inclusive growth, localisation and facilitating access to finance. There have been mooted versions of equity equivalents, where, in place of equity, the company either pays a tax or faces some other market-related penalty. An example is the procurement rules, where empowered firms are given a price advantage.
PARTICIPATE IN THE BER BUSINESS TENDENCY SURVEYS
Lebohang Namo
After plunging from -6 to -20 index points in 2025Q1, the FNB/BER Consumer Confidence Index (CCI) rebounded to -10 in Q2. A number of adverse shocks knocked consumer sentiment during the first quarter of 2025, including the Finance Minister’s (aborted) proposal to hike VAT by two percentage points (%pts); the fallout between the ANC and the DA about the budget; a brief return to stage 6 load-shedding; souring diplomatic relations between SA and the US; and US president Trump’s alarming import tariff proposals. The second quarter saw a partial recovery in consumer confidence to -10, from -20. The Q2 reading is on par with the CCI at the same time last year (-10 in 2024Q2), but remains below the more positive readings recorded during the second half of 2024. Consumer confidence is also still well below the average CCI reading of -1 since 1994, signalling that consumers remain relatively pessimistic about the outlook for the economy and their household finances over the next twelve months.
Headline factory-gate inflation, measured by the Producer Price Index (PPI) for final manufactured goods, slowed to 0.1% y-o-y in May 2025 from 0.5% in April. This was the lowest reading since November 2024. Food, beverages and tobacco products were the largest contributor (up 3.7%, +1.1%pts), while basic & fabricated metals (down 12.3%, -6.1%pts) and chemicals, rubber & plastic products (down 1.4%, -0.4%pts) were the largest detractors. On a monthly basis, PPI fell by 0.3% from 0.5% in April.
The SARB’s composite leading business cycle indicator declined by 0.3% in April 2025, following a revised 0.8% increase in March. Seven out of the ten component indicators declined, with the largest drags from the real M1 money supply (six-month smoothed growth rate) and the volume of domestic orders in the manufacturing sector. The only encouraging factors were increases in the number of approved residential building plans and new passenger car sales.
According to Stats SA’s Quarterly Employment Statistics (QES), employment fell by 74 000 (-0.7%) q-o-q in March to just under 10.6 million formal sector jobs. Trade, community services, mining, business services, construction and electricity saw the biggest declines. In contrast, manufacturing expanded by 0.2% q-o-q, while the transport sector remained stable. On an annual basis, total employment declined by 95 000 (0.9%) in March 2025.
A third estimate showed that US GDP declined by -0.5% (annualised) in Q1. This was worse than the first two estimates and the first contraction in 3 years. The drop was largely due to higher imports and weaker government spending. Looking ahead, there are increased concerns about stagflation (rising prices while growth stagnates). The S&P Global Flash PMI Composite Output Index fell to 52.8 points in June from 53 in May. Despite the slowing pace of growth, output has increased continually for 29 consecutive months. The manufacturing sector saw an increase for the first time since February, while growth in the services sector eased. Selling prices rose sharply in both sectors, and heavy blame was placed on the tariffs, with the services sector also affected by higher financing and wage costs.
Conference Board data showed that the Consumer Confidence Index fell to 93 points in June from an upwardly revised 98.4 in May. Households are increasingly worried about job availability as they see the increased uncertainty due to the tariff effects. Big-ticket purchases went down due to import duties, while consumers expected inflation to rise for the first time since October 2023.
The HCOB Flash Composite PMI Output Index came in at 50.2 points in June, unchanged from May. The index saw marginal improvements in business activity, while new orders remained near stabilisation. The index has remained marginally on the expansionary side for six consecutive months. There was marginal growth in Germany, while France saw further contractions. France’s current downtown began in September 2024, taking the current reduction sequence to 10 months. Overall, the HCOB Flash Eurozone Manufacturing PMI Output Index continued to expand (51), albeit at a slower pace (51.5 in May). Input cost inflation eased, while output prices increased at a faster pace. The HCOB Eurozone Services PMI Business Activity Index increased to a two-month high of 50 points in June (from 49.7), supporting a marginal gain in employment. Germany reported a rise in new services exports for the first time in about three-and-a-half years.
The German IFO Business Climate Index rose to 88.4 in June from 87.5 in May, the highest level in almost a year, beating estimates of 88.2 points. Companies felt that their current situation was improving, while the expectations Index also increased. Meanwhile, the GfK Consumer Sentiment Index fell to -20.3 points in July from a marginally revised -20 points for June. This is the first drop in four months. The propensity to save increased to 13.9 for July compared to 10 for June. This is a clear expression of uncertainty as consumers opt to save for an uncertain future. However, the upcoming government stimulus, easing inflation, and favourable wage agreements boosted a 7-point increase to the consumers' economic expectations moving into July (20.1 vs. 13.1).
Editor: Lisette IJssel de Schepper
Tel: +27 (0)21 808 9755
Email: lisette@sun.ac.za
Click here for previous editions of this publication.
Please refer to the glossary on the BER website for explanations of technical terms.
Friday, 27 Jun 2025
