Data to fill state of the nation’s growth vacuum

THE POSTPONED State of the Nation Address (Sona) could dominate the scheduled data releases next week.

The address usually sets the tone for economic progress for the year, so that beats any historical data releases, but the history provides the foundation for progress this year.

The most important data release is that of the fourthquarter 2017 Quarterly Labour Force Survey (QLFS) as that shows what is happening with unemployment and job creation.

In addition, there are several minor data releases that give a sense of how the economy performed last year.

From an economic analysis point of view, the most important data series in the Quarterly Labour Force Survey is that of formal employment growth.

This reportedly showed an acceleration to 3.2% y/y in the third quarter from 2.5% y/y in the second quarter.

This explains why new vehicle sales grew on a y/y basis for the fifth consecutive month in October, as with formal employment you get a payslip that allows you to access credit, which is what you need to buy a new car as very few people are able to buy a new car cash.

So despite the bad news headline of the unemployment rate being stuck at 27.7% for the third consecutive quarter, there is good news if you focus on employment growth.

The key question in the December retail data is how much did the “Black Friday” and “Cyber Monday” promotions “steal” from Christmas sales.

Real retail sales surged to 8.2% y/y in November and this level of growth was unlikely to have been sustained in December.

The reason why retail and other domestic trade is so important is because trade accounted for 36% of total turnover of non-farm formal businesses in the second quarter 2017.

This was followed by 27% for manufacturing, 12% for business services, 9% for transport and communications, 6% for mining and 5% for construction.

The South African business sector earned 11 cents of profit for every rand of turnover generated.

Business services took the top spot as the industry with the highest profit margin ratio, followed by personal services, manufacturing, transport and trade.

The electricity, gas and water supply industries, as well as mining, experienced losses as these industries spent more than they received in revenue.

In addition to the above releases, there will also be data releases on wholesale trade, motor trade and building plans as well as statistics on civil cases for debt.

Real wholesale trade sales rose by 1.2% y/y in November after a revised 0.7% (0.9%) y/y dip in October.

The expectation is that y/ y growth continued in December.

Nominal motor trade sales rose by 7.4% y/y in November after a revised 8.3% (8.7%) y/y jump in October.

However, slower growth is expected in December as the number of new vehicles sold fell y/y in December.

The number of civil summonses for debt fell by 7.1% y/y in November after a 5.8% y/y drop in October and a continuation of y/y declines is expected in December.

The other major release is building plans.

That has two components, namely building plans passed by the larger municip alities and building plans completed.

The former is a leading indicator as it shows what building activity is likely to result, while the latter is a coincident or lagging indicator as it shows what has been built.

Please bear in mind that it takes about six months to build a house and around two years to build a major non-residential building such as a shopping mall or office complex.

Building plans passed have been affected by the drop in business confidence, so the real value of non-residential plans passed has plunged by 18.7% y/y in the first 11 months of 2017.

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