Reweighted inflation data to make debut
The unemployment figures, consumer inflation and retail sales data to be released this week are likely to be dismal, reinforcing the sense that the economy is battling to climb out of its trough.
On Tuesday, Statistics SA (Stats SA) will release its quarterly household Labour Force Survey for the fourth quarter of 2016. Economists are not expecting much deviation in the unemployment rate, which rose to a record 27.1% in the third quarter, from 26.6% in the second quarter.
BNP Paribas Securities economist Jeffrey Schultz feels meaningful gains in the labour market are most unlikely given the persistent weakness in the economy, particularly in manufacturing and mining.
“There is likely, however, to have been a seasonal uptick in employment in the trade sector owing to spikes in temporary employment throughout the festive season in the retail and hotel and restaurant trade.”
On Wednesday, Stats SA will publish the consumer inflation rate for January, calculated according to its reweighted and rebased basket. This should be the highlight of the economic data releases this week. Though there is a cautious expectation that the technical adjustments could mute the inflation data over the coming months, economists have warned that high food and fuel inflation probably kept the headline figure elevated in January.
First National Bank economist Mamello Matikinca expects the new weights to have contributed to a slight moderation in inflation in January, but only to 6.7% from December’s 6.8%. “While we expect a slight moderation in food prices, at 10.2%, prices remain high due to bread and cereals, fruit, sugar and other food prices, which are still registering double-digit inflation,” Matikinca said.
Retail sales data for December will also be released on Wednesday, but with consumer confidence in tatters and household credit extension at record lows, there is scant expectation that the retail sector finished 2016 on a high note.
BNP Paribas Securities expects real headline retail sales to have slipped into negative territory in December, falling to -0.3% year on year, following the surprisingly strong growth of 3.8% year on year recorded in November.
Investec economist Kamilla Kaplan, who expects retail sales growth of 0.9%, said the November figure had been boosted by Black Friday discounts, but she feared December sales might have underperformed.