Manufacturing and mining in the spotlight
The production side of the economy will come into focus this week, with both mining and manufacturing production figures due out.
The First National Bank (FNB) and Bureau of Economic Research (BER) consumer confidence index will be released on Wednesday.
May’s mining production figures are due on Tuesday.
FNB economist Mamello Matikinca said: “Having expanded 1.7% year on year in April, May figures could well contract in light of slightly softer global demand in the month, uncertainty around what would then have been the looming Mining Charter announcement and work stoppages at some mines due to illegal operations.”
Mining is expected to continue to perform well for the rest of 2017 because of the rebound in commodity prices.
Investec economist Kamilla Kaplan said the FNB/BER index for the first and second quarter was likely to reflect persistently depressed sentiment among consumers in the first quarter of 2017.
The fieldwork, which was in April, would probably include the effect of the cabinet reshuffle and sovereign credit ratings downgrades.
“Specifically, the degree of confidence concerning the economic prospects over the next 12 months and, consequently, the household financial position likely fell further back,” said Kaplan.
On Thursday, Statistics SA will release the manufacturing figures for May.
While the manufacturing purchasing managers’ index picked up significantly from 44.7 in April to 51.5 in May, Matikinca said domestic demand remained weak.
Kaplan said she expected manufacturing production to have declined 4.9% year on year in May after a contraction of 4.1% in April. Trading Economics forecasts a marginal increase of 0.2%.
Kaplan said the underlying growth momentum had been particularly weak, adding that there was a possibility that manufacturing production might have contracted for the fourth consecutive quarter in the second quarter of 2017.
BNP Paribas economist Jeff Schultz warned that if manufacturing performed particularly badly, there might be another quarter of negative economic growth, prolonging the recession.
The South African Chamber of Commerce and Industry will also release its trade conditions survey on Thursday.
In May, the trade activity index remained below 50 at 49, up from 45 in April.