The FNB/BER Civil Confidence Index gained 3 points to register a level of 15 in 2018Q2. The sustained low confidence is explained by a deterioration in almost all of the underlying indicators, most notably construction activity and tendering competition.

The seasonally adjusted Absa Purchasing Managers’ Index (PMI) declined from a solid 51.5 points recorded in July to 43.4 in August. This is the lowest level in just over a year. The deterioration was driven by sharp declines in the new sales orders index as well as the business activity index. However, inventories and supplier deliveries came in above the neutral 50-point mark in August, which provided some support to the headline PMI. Overall, the average level of the PMI recorded during the first two months of the third quarter was 47.5, which is below the neutral 50-point mark and two points below the average recorded in the second quarter.

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.

Economic indicators

Key indicators

Mon Sep 24 2018 22:50:05

Rand-Dollar

14.3881

0.58%

Rand-Pound

18.8744

0.76%

Rand-Euro

16.9045

0.50%

Gold

1199.66

0.20%

Platinum

826.50

0.18%

Brent Crude EOD

78.73

0.00%

R186

9.08

0bps

R207

7.68

0bps

Share indices (Previous day's close)

Last updated: Fri Sep 21 2018 08:12:44

JSE all-share

56547

0.18 %

JSE Top 40

50397

0.25 %

US S&P 500

2931

0.78 %

German Dax

12326

0.88 %

Japan Nikkei

23675

0.01 %

Please note


Recent releases

Domestically, the focus was on the interest rate decision by the Monetary Policy Committee (MPC) of the SA Reserve Bank (SARB) yesterday. Concerns about the weak state of the real economy and (more importantly) the lack of demand-side pressure on inflation drove the MPC to keep rates unchanged. Furthermore, inflation and inflation expectations remain relatively contained. We also discuss the stimulus plan announced by President Cyril Ramaphosa on Friday morning. The international section looks at the latest consumer inflation prints in the Eurozone (EZ) and the United Kingdom (UK). The markets section unpacks reasons why the rand strengthened over the last week. ...Get it here

According to the 2018Q3 BER Retail Survey, business confidence among retailers remained unchanged during 2018Q3 following the dip recorded in the second quarter. While survey participants are cautiously optimistic that conditions will improve in 2018Q4, the numerous headwinds facing the consumer will limit any upside. In all, the results suggest that the trade sector remains under strain and could provide less of a boost to overall economic growth in 2018H2 than previously thought....Get it here

The Retail Survey (Text Only) document is a shorter version of the Retail Survey report and does not contain actual or historical survey data. According to the 2018Q3 BER Retail Survey, business confidence among retailers remained unchanged during 2018Q3 following the dip recorded in the second quarter. While survey participants are cautiously optimistic that conditions will improve in 2018Q4, the numerous headwinds facing the consumer will limit any upside. In all, the results suggest that the trade sector remains under strain and could provide less of a boost to overall economic growth in 2018H2 than previously thought....Get it here

In a close decision, the MPC kept the repo policy interest rate unchanged at 6.50%. ...Get it here

In the third quarter, average headline CPI inflation expectations were 5.3% for 2018, up by 0.1 percentage point (% pt). For 2019 the expectations were 5.6% (up 0.2% pt) and for 2020 they were also 5.6% (up 0.1% pt)....Get it here

In the third quarter, average headline CPI inflation expectations were 5.3% for 2018, up by 0.1 percentage point (% pt). For 2019 the expectations were 5.6% (up 0.2% pt) and for 2020 they were also 5.6% (up 0.1% pt)....Get it here

The Manufacturing Survey (Text Only) document is a shorter version of the Manufacturing Survey report and does not contain actual or historical survey data. According to the Absa Manufacturing Survey, manufacturing business confidence declined by a further 6 points in the third quarter of 2018 to reach 21 following a 10-point drop in the previous quarter. This means that almost eight out of ten respondents were unsatisfied with prevailing business conditions....Get it here

According to the Absa Manufacturing Survey, manufacturing business confidence declined by a further 6 points in the third quarter of 2018 to reach 21 following a 10-point drop in the previous quarter. This means that almost eight out of ten respondents were unsatisfied with prevailing business conditions....Get it here

As in 2018Q2, the FNB/BER Building Confidence Index registered a level of 29 in 2018Q3. Although the overall index was flat, there were noteworthy changes in confidence among the sub-sectors which make up the index, particularly a sharp drop in sub-contractor confidence....Get it here

This report outline some of the key findings of the BER’s 2018Q3 Building survey, including the FNB/BER Building Confidence Index. As in 2018Q2, the FNB/BER Building Confidence Index registered a level of 29 in 2018Q3. Although the overall index was flat, there were noteworthy changes in confidence among the sub-sectors which make up the index, particularly a sharp drop in sub-contractor. The data for 2018Q3 is also provided....Get it here

Forecast publications

The GDP contraction in 2018Q1 and likely modest recovery in Q2 has forced a sizeable downward adjustment to our 2018 real GDP growth forecast....Get it here

The GDP contraction in 2018Q1 and likely modest recovery in Q2 has forced a sizeable downward adjustment to our 2018 real GDP growth forecast....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

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

Given the lack of visibility on politics and the recent negative experience, we have stuck to a conservative medium-term real GDP growth outlook of only 1.6%....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

Domestically, the focus was on the interest rate decision by the Monetary Policy Committee (MPC) of the SA Reserve Bank (SARB) yesterday. Concerns about the weak state of the real economy and (more importantly) the lack of demand-side pressure on inflation drove the MPC to keep rates unchanged. Furthermore, inflation and inflation expectations remain relatively contained. We also discuss the stimulus plan announced by President Cyril Ramaphosa on Friday morning. The international section looks at the latest consumer inflation prints in the Eurozone (EZ) and the United Kingdom (UK). The markets section unpacks reasons why the rand strengthened over the last week. ...Get it here

Last week, Statistics South Africa (Stats SA) released key data on the health of the SA economy at the start of Q3. The data proved to be a mixed bag, with mining output disappointing while manufacturing performed much better than expected. The international section looks at industrial production figures from the US, Eurozone and UK. Furthermore, we unpack the interest rate decisions of several central banks. The most remarkable decision was Turkey’s central bank call to hike its interest rate by 625 basis points. This move was welcomed by markets and also lifted spirits towards the rand – more on this in the markets section. ...Get it here

Last week saw domestic financial markets remain under pressure. The rand exchange rate weakened further as Stats SA reported that the domestic economy entered a technical recession in the second quarter of 2018. Among the economic subsectors, the contraction was most severe in the agriculture, trade and transport sectors. Only the mining and finance sectors were able to register significant positive growth. The improvement in mining came on the back of a surge in mineral exports, contributing to a trade surplus during the second quarter, which in turn led to an improvement in the current account deficit. Internationally, the latest trade data from China and the US points toward no relief of the ongoing ‘trade war’ between the two super powers. China’s trade surplus with the US reached an all-time high in August. Meanwhile, nonfarm payroll data released on Friday indicates a healthy US labour market, with accelerating wage increases...Get it here

Economic data released last week and this morning reflects a domestic economy that is currently in a weakened state. In August, the manufacturing sector suffered a sharp decline in new sales orders, coupled with a drop in business activity, as indicated by the Absa Purchasing Managers’ Index (PMI). Added to this, credit extension slowed down to levels on par with consumer inflation, implying no growth in real terms. Internationally, we briefly discuss the financial crises unfolding in Argentina and Turkey. The section also unpacks data releases from the US, Eurozone and China. The markets section extends the focus to the financial implications of the troubles in Argentina and Turkey, which also impacted the currencies of South Africa (SA) and India. Besides these, local share prices were affected by a regulatory dispute with Nigeria, slashing the price of MTN ...Get it here

A spate of flash PMI data for August was released last week which confirmed that growth in developed economies remains well supported. The focus on the domestic side was on the July consumer inflation numbers. An acceleration to 5.1% y-o-y was recorded, in part as a result of the rising price of petrol....Get it here

Global and domestic financial markets saw wild swings last week as the deteriorating situation in Turkey spilled over to other emerging market currencies, most notably the rand exchange rate. ...Get it here