SA’S TRADE SURPLUS ‘TO CONTINUE’

But export growth likely to slow expert –

SOUTH Africa is likely to have maintained a trade surplus in August‚ according to Investec economist Kamilla Kaplan.

The trade account incurred a surplus in the first seven months of the year of R17.4-billion‚ compared to a deficit of R24.7-billion in the same period last year. “The updated figures for August should see the cumulative balance remaining in surplus [in the month of August‚ R4-billion]‚” said Kaplan.

She noted that the yearto-date surplus had been underpinned by export growth of 10.1%, outpacing import growth of 2.9%.

However‚ she said the export growth momentum was at risk of not being sustained.

“Recently‚ both the OECD [Organisation for Economic Cooperation and Development] and UN produced updated economic forecasts and in both instances‚ global trade growth is expected to be particularly weak this year. Trade indicators such as the CPB World Trade monitor show that global trade momentum has been negative since April. Similarly‚ the global manufacturing PMI [Purchasing Managers Index] has reflected persistently weak activity in new export orders in the year so far‚” Kaplan said.

The trade data is due for release on Friday. This week will also see the release of private sector credit extension data‚ M3 money supply data and producer price inflation‚ all for August‚ as well as nonfarm payrolls data for the second quarter of the year.

According to Kaplan‚ private sector credit extension rates are forecast to have remained subdued in August‚ rising by 6.5% year-on-year versus a prior figure of 6.8%.

She pointed out that credit dynamics had been dampened by the higher interest rate environment‚ relatively tight credit standards as well as depressed business and consumer confidence. The Producer Price Index (PPI) is expected to have lifted slightly in August to 7.5% year-on-year from 7.4% in July as lower base factors act to boost the annual growth outcome‚ she said.

“Details of the August PPI are likely to reflect ongoing upward price pressure from the manufactured food component‚ on strong price pressures earlier in the supply chain linked to lagged drought effects. Some relief should stem from the fuel component on substantial petrol and diesel price cuts in July and August.”

Kaplan added that the Quarterly Employment Statistics update for the second quarter of 2016 is likely to confirm weak labour market dynamics.

“Subdued economic activity and depressed business confidence are likely to continue restricting private sector employment growth. Indeed‚ survey evidence drawn from retail and manufacturing confidence surveys‚ signals poor employment prospects. ”–