ABSA RELEASES REPORT SHOWING SOFTENING OF ECONOMY IN SOUTH AFRICA

ABSA’S Economic Activity Tracker report, released on Friday, said surveyed data was generally softening even before the recent riots and looting. Footfall in grocery retailers, pharmacies and “other” retail establishments slumped in the week to the end of July 9, because of a surge in new Covid-19 infections and the level 4 lockdown. “Our proprietary data on credit and debit card transactions show an 8 percent drop in the number of card transactions in June, compared with May, and a 7.2 percent drop in the value of those transactions, but after stripping out seasonal factors, the month-onmonth declines were only about a third as big. Meanwhile, electricity demand rose in the week ending July 11, but remained subdued compared with the pre-Covid-19 period in 2019.” Both the Absa manufacturing and the Markit economy-wide purchasing managers’ indices retraced last month, compared with May, although they still remained in expansionary territory. New domestic vehicle sales slumped in May and last month. Official hard economic activity indicators had also printed softer so far in the second quarter, with manufacturing output down 2.6 percent m/m seasonally adjusted in May and mining production dropping 3.5 percent on the same basis. Credit ratings agency Moody’s argued that South Africa’s economic recovery could be disrupted if the unrest was protracted, because it this could adversely affect consumer and business confidence. The agency also said that social tensions would make the task of fiscal consolidation harder,. |