Coming data releases to reflect the true state of nation as Budget day looms

ECONOMIC WEEK AHEAD

THERE will be a flurry of data releases next week as there will be the normal month-end statements as well as the startof-the-month ones.

On Tuesday we have December money supply data and the December Statement of National Revenue, Expenditure and Borrowing later in the afternoon.

The money supply data will show whether there is renewed appetite for credit from the household sector, as this has been subdued in the past few months, but the 8.2% year-on-year (y/y) surge in real retail sales in November shows there is renewed appetite for credit. Broad M3 money supply growth rose to 6.61% y/y in November from 5.01% y/y in October, while narrow M0 money supply growth rose to 6.55% y/y from 6.26% y/y.

The December government financing data will be crucial in determining the course of the Budget to be presented on February 21. The first few months of the fiscal year were poor as revenue growth lagged expenditure growth. The fiscal deficit, however, narrowed by 6.1% y/ y in November to R15.3bn as government revenue growth outpaced spending.

Revenue growth was 6.7% y/y in November from only 3.1% y/y in October and 5.3% y/y in September, while spending rose by 4.5% y/y after a 6.0y/y increase and a 5.2y/y gain. Given the 10.7% y/ y increase in nominal retail sales in November, VAT receipts should have surged as well, in addition to company profits. December is generally the month when the government gets its largest monthly tax take and revenue should once again exceed R140bn.

On Wednesday we will have the December foreign trade data at 2pm.

South Africa’s total electricity consumption rose by 0.9% y/y in November. The increase at end- user stage, in other words distributed to provinces and not used in power stations, showed a stronger increase and was up 2.1% y/y in November. We should see a y/y increase in December as industrial production has been on a recovery mode recently with steel production for instance up 20.9y/y in December.

The foreign trade surplus widened to R13bn in November from R4.339bn in October as exports surged by 17.1% y/y to a record R116.2bn. On a yearto-date basis, exports are up 7.6% y/y and a narrower foreign trade surplus is expected in December as export growth reverts to the mean.

On Thursday we have the start- of- the- month releases with the Absa January purchasing managers’ index (PMI) first up in the morning, followed by December electricity data at 1pm and then December new vehicle sales and exports in the afternoon

The Bureau for Economic Research (BER) Absa manufacturing index eased to 44.9 in December from 48.6 in Novem- ber. The business expectations index rose to 61.9 in December from 50 in November as purchasing managers believe a change in the ANC leadership will result in stronger economic growth this year and economists are hoping that this will pull the PMI above the breakeven 50 level. The last time the PMI was above 50 was in May 2017.

The business activity (output) index however slumped to 42.7 in December from 48.0 in November. The new sales orders index fell to 45.0 in December from 49.1 in November. The employment index eased to 45.0 in November from 45.6 in October, while the prices index slipped to 71.4 in November from 73.2 in October due to the stronger rand. The inventory index fell to 43.2 in November from 48.8 in October. This slump in inventories may be due to a combination of supply disruptions caused by the bad weather in October and better than expected demand in November.

South Africa’s total electricity consumption rose by 0.9% y/y in November. The increase at end- user stage, in other words distributed to provinces and not used in power stations, showed a stronger increase and was up 2.1% y/y in November. We should see a y/y increase in December as industrial pro- duction has been on a recovery mode recently with steel production for instance up 20.9 y/y in December.

The National Association of Automobile Manufacturers of SA (Naamsa) new vehicle sales rose by 1.8% in 2017 to 557,586 units after slumping by 11.4% in 2016.

The year ended off on a disappointing note as new vehicle sales fell by 2.4% y/y in December after a string of positive y/y changes and a return to y/y growth is expected in January. The 2017 total was below the start of the year Naamsa forecast of 561,000. This year Naamsa expects a rise to 572000.