Focus will be on private sector credit
The focus this week will be on private sector credit extension figures, which will be published by the SA Reserve Bank on Tuesday. The SA Revenue Service (Sars) will publish the country’s trade balance on Wednesday.
On Thursday, the Bureau for Economic Research (BER) will, in partnership with Absa, publish the manufacturing survey, and Stats SA will on Friday release electricity figures generated in December.
The slowdown in private sector credit demand deepened in November, coming in well below market expectations and reflecting the impact of a cumulative 475 basis points of interest rate hikes since November 2021.
The Reserve Bank said private sector credit increased 3.84% year on year in November — well below market consensus of 4.4% and below 3.94% growth recorded in October. The increase is the 29th consecutive month of growth, but at the slowest rate since February 2022.
Nedbank economist Isaac Matshego said the bank forecasts private credit to grow at 4.1% in December, boosted by a modest increase in investment and bills. “However, general credit conditions remain weak due to the unfavourable economic environment. We expect year-on-year growth in loans and advances — excluding investment and bills — to edge lower to 4.2% from 4.3% as higher interest rates, weaker household finances and fading consumer confidence continued to undermine household spending and credit demand, while weak economic activity and business confidence weighed on corporate credit demand.”
Economist Lara Hodes said Investec expects private credit to have picked up modestly to about 4.2% when measured on an annual basis in December.
Sars will release the trade balance for December on Wednesday. SA posted a trade surplus of R21.02bn in November, above market estimates of a R5.8bn surplus.
Exports increased 9.2% month over month to R185.8bn, due to a rise in sales of base metals; prepared foodstuff; and mineral products, precious metals & stones, Sars reports.
Imports declined 10% to R164.8bn, amid a drop in purchases of mineral products, original equipment components, vehicles & transport equipment and machinery & electronics.
Matshego said Nedbank projects a narrower trade surplus of about R10bn in December from R21bn in November, as exports usually fall sharply when factories and mines close for the festive season. “This [is also caused] by subdued global demand, persistent load-shedding and challenges at Transnet ports. Imports also declined due to seasonal reasons, albeit slower than exports, and were dragged down by weaker domestic demand.”
Hodes said Investec expects the surplus to narrow in December to about R12.5bn as exports probably declined. “Export potential remains constrained by a still subdued global environment and domestic specific challenges.”
The Absa purchasing managers’ index (PMI) for January will be released on Thursday. The index ticked up to expansionary terrain and rose 2.7 points to 50.9 index points, partly due to an improvement in business activity, as some factories benefited from less load-shedding in December.
FNB chief economist Mamello Matikinca-Ngwenya said that though the index improved in December as some factories benefited from less load-shedding, other subcomponents of the PMI continue to reflect weak demand for manufactured goods. She warned that supply-side factors, including the intensifying crisis at the ports, threaten the sustainability of the improvement recorded in December.
Also on Thursday, Stats SA will release data on electricity generated and available for distribution for December.
In November, electricity production fell 3.3% year on year, after a 1.6% expansion in October, which interrupted a 24-month consecutive decline in production.