Inflation Expectations Survey 2021Q1

In 2021Q1, average inflation expectations of analysts, business people and trade unions for 2021 and 2022 declined by 0.3% pts relative to 2020Q4. Inflation is forecast to average 3.9% (4.2% previously) in 2021 and 4.2% (4.5% previously) in 2022. While business people and trade unions lowered their forecasts, analysts revised their projections upwards in the first quarter. It is rare in the survey’s history of 21 years that the expectations of business people match those of analysts and that the expectations of trade union representatives are below those of analysts.

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BER Weekly Review

Due to the Easter long weekend, the next BER Weekly Review will be released on Monday 12 April.

After rising to 16 in 2021Q1, the FNB/BER Civil Confidence Index gained a further five points to register a level of 21 in 2021Q1. Higher activity this quarter boosted sentiment.

The seasonally adjusted Absa Purchasing Managers’ Index (PMI) rose for a third consecutive month to reach 57.4 index points in March, from 53 the month before. The increase was supported by an improvement in all five subcomponents relative to February. Indeed, only the employment index remained stuck below the neutral 50-point mark with the other four key subindices pointing to an expansion.

The RMB/BER BCI declined from 40 to 35 in the first quarter of 2021. This means close to seven out of ten senior executives expressed dissatisfaction with prevailing business conditions, up from six previously. Retail saw the biggest decline, followed by manufacturing and new vehicle dealers. Sentiment among building contractors and wholesale traders deteriorated slightly. Such underlying dynamics are not reflective of a robust economic upswing.

The FNB/BER Consumer Confidence Index (CCI) increased by another 3 index points to a level of -9 in the first quarter of 2021. The recovery to -9 index points brings the CCI back in line with the reading recorded in March 2020, just before South Africa entered its first strict nationwide lockdown. Although it is heartening that the CCI has now recovered most of its COVID-19-induced losses, consumer confidence in general remains depressed - the latest reading of -9 is still well below the average CCI reading of +2 since 1994.