Downward trend in latest figures expected

Employment figures, producer price inflation, private sector credit extension and trade data are due out this week. Although the trade account is likely to show another small surplus, the rest of the data is expected to continue its downward trend, reflecting the weak state of the economy.

Statistics SA will release the Quarterly Employment Statistics, surveying the formal, nonagricultural economy, for the first quarter on Tuesday.

In early June, the firstquarter Quarterly Labour Force Survey revealed the unemployment rate had jumped to 27.7%, the highest since the series began.

This took the total number of unemployed people in SA to a record high of 6.2-million.

Stats SA will release the Producer Price Index (PPI) for May on Thursday.

It retreated to 4.6% year on year in April, from 5.2% year on year in March, but economists are divided about whether this decelerating trend will continue.

The continued slowdown in manufactured-food price inflation, falling food prices at the agricultural level and very depressed domestic demand suggest the PPI should keep slowing.

However, higher fuel prices during May could lift the PPI marginally in much the same way as they buoyed up the May Consumer Price Index.

But if the PPI does tick upwards, it is not expected to be the start of a new upward trend. The consensus is that subdued domestic demand, especially in the manufacturing sector, is likely to keep a firm lid on factory-gate prices over the course of the year.

The Reserve Bank will release private-sector creditextension figures for May on Thursday.

Investec economist Kamilla Kaplan expects the reading to remain unchanged at 5.9% in May as it was in April, with the rate of credit extended to households remaining muted at under 3.0% year on year and corporate credit extension continuing to grow at about 8.5% year on year.

Trade figures for May are due out on Friday.

Most economists are expecting the trade account to post another surplus — the fourth in a row.

From January to April, SA recorded a trade surplus of R9.89bn compared to a deficit of R26.39bn during the same period in 2016.

The improvement in the trade position is due to imports decreasing while commodity exports have been recovering.

Poor purchasing managers’ index readings and the lacklustre manufacturing figures do cast some doubt over whether the country will manage to sustain its export performance in 2017.