New data will show if SA is enjoying growth
The August mining and manufacturing production figures are expected to give a glimpse into how SA’s economy is shaping up in the third quarter after a strong second quarter.
On Tuesday, Stats SA will release August’s manufacturing production figures. Manufacturing output has contracted on a year-on-year basis for the past four months.
First National Bank economist Mamello Matikinca expects the August print to break this trend, with marginal growth. The August Absa purchasing managers index (PMI) rose from 42.9 in July, to 44 points, which suggests slightly better growth.
Matikinca said: “Higher oil and fuel prices are also likely to lend support to overall output. Nevertheless, despite a more favourable global backdrop and a weaker rand, which should be a tailwind for manufactured exports, the local manufacturing sector remains biased to production for local consumption, which [is] weak.”
Investec economist Kamilla Kaplan expects a contraction of 0.8% year on year after a decline of 1.4% year on year in July, based on persistently weak domestic demand.
“Part of the decline would be a function of higher base factors, along with weak underlying activity. Advance indications provided by the PMI and the third-quarter Absa BER manufacturing survey suggest that manufacturing production weakened in the third quarter relative to the prior quarter.”
On Tuesday, Experian will also release its first Consumer Default Index (CDI) for SA.
The CDI measures the rate of first-time consumer defaults across home, vehicle, personal and credit card product accounts in the country.
The mining production figures will be released by Statistics SA on Thursday.
Matikinca expects the August figures to show a yearon-year contraction for the first time in 2017, based on the higher base of August 2016.
“The global oversupply of iron ore has pushed the price of the commodity lower, and output of the ore, which accounts for nearly 15% of mining production, should have softened,” she said.
Kaplan expects mining production to register a decline of 2% year on year in August after having increased in the eight months previously.