In­fla­tion data and re­tail sales dom­i­nate the first quar­ter


Weekend Argus (Saturday Edition) - - BUSINESS -

ALTHOUGH the March con­sumer in­fla­tion data will dom­i­nate the data re­lease cal­en­dar next week, other re­leases such as those for re­tail sales and the lead­ing in­di­ca­tor will show how the econ­omy per­formed in the first quar­ter.

Con­sumer in­fla­tion eased to 4% year-on-year (y/y) in Fe­bru­ary from 4.4% y/ y in Jan­uary and 4.7% y/y in De­cem­ber.

It is rich car­ni­vores that are keep­ing in­fla­tion at or above 4% y/y, as the low­est in­come group had an in­fla­tion rate of only 1.3% y/y, while the high­est in­come group had an in­fla­tion rate of 4.2% y/y as meat in­fla­tion was 11.4% y/y in Fe­bru­ary from 13.4% y/y in Jan­uary.

Over­all food in­fla­tion eased to 4% y/y in Fe­bru­ary from 4.6% y/y in Jan­uary, 4.9% y/y in De­cem­ber and 5.2% y/y in Novem­ber.

Core in­fla­tion, which ex­cludes volatile com­po­nents such as food and en­ergy, slipped to 4% y/y in Fe­bru­ary from 4.1% y/y in Jan­uary and 4.2% y/y in De­cem­ber.

There should be an eas­ing to be­low 4% y/y in over­all in­fla­tion in March, largely due to the slow­down in the petrol price y/y in­crease.

The Gaut­eng petrol price y/y in­crease slowed to only 1.6% in March from Fe­bru­ary’s 3.7% and Jan­uary’s 8.2%.

The lead­ing in­di­ca­tor rose by 0.3% month- on- month (m/m) in Jan­uary.

The lead­ing in­di­ca­tor is sup­posed to fore­cast eco­nomic ac­tiv­ity six months ahead.

Five of the 10 com­po­nent time se­ries that were avail­able for Jan­uary in­creased, while the re­main­der de­creased.

The largest pos­i­tive con­tri­bu­tions to the move­ment in the com­pos­ite lead­ing busi­ness cy­cle in­di­ca­tor in Jan­uary came from an in­crease in the South African pro­duced ex­port com­mod­ity price in­dex (US dol­lar based) and an in­crease in the Busi­ness Con­fi­dence In­dex.

The largest neg­a­tive con­tri­bu­tions was due to a de­crease in the aver­age num­ber of hours worked in the man­u­fac­tur­ing sec­tor and a de­cel­er­a­tion in the 12-month per­cent­age change in the num­ber of new pas­sen­ger ve­hi­cles sold.

Real re­tail trade sales rose by 3.1% in Jan­uary af­ter a 2.9% gain in 2017 and a rise to the 4% y/y level is ex­pected in Fe­bru­ary.

Real whole­sale trade sales fell by 1.9% in Jan­uary af­ter a 3% drop in 2017, but a re­turn to a y/y in­crease is fore­cast for Fe­bru­ary.

Nom­i­nal mo­tor trade sales rose by 6% in Jan­uary af­ter a 3.8% gain in 2017 and a con­tin­u­a­tion of this pos­i­tive trend is an­tic­i­pated for Fe­bru­ary.

There are two ma­jor non- Sta­tis­tics South Africa data re­leases due next week as well.

The first is bulk ex­ports and the se­cond is steel pro­duc­tion.

South Africa’s bulk ex­port vol­umes rose by 4.3% y/y to 15.5 mil­lion tonnes in Fe­bru­ary from a re­vised 54.6% (88.8%) surge in Jan­uary to a record 20.8 Mt (25.4Mt) ac­cord­ing to the Transnet Na­tional Ports Au­thor­ity (TNPA).

TNPA said there was an er­ror in for­mula cal­cu­la­tion for iron ore in Jan­uary.

Bulk ex­ports ex­clud­ing Sal­danha were up 25.6% in the first two months to 21Mt.

In Jan­uary bulk ex­ports out of Richards Bay, which are mostly coal, saw a 28.6% y/ y jump to 9Mt, while bulk ex­ports out of Sal­danha, which are mostly iron ore, saw a mas­sive 90.6% y/ y surge to a re­vised 10.2Mt (14.8Mt).

This may in part be due to the shift in the Lu­nar New Year from Jan­uary last year to Fe­bru­ary this year.

So Chi­nese steel pro­duc­ers front loaded their Fe­bru­ary iron ore and coal im­ports into Jan­uary as steel pro­duc­tion curbs, that were im­posed dur­ing the win­ter months to ease pol­lu­tion, will be lifted in Fe­bru­ary.

Steel pro­duc­tion fell by 0.9% y/y in Fe­bru­ary.

This fol­lowed strong growth in the pre­vi­ous months as pro­duc­tion grew by 8.1% y/y in Jan­uary af­ter surg­ing by 20.9% y/y in De­cem­ber and a 10.1% y/y rise in Novem­ber.

A re­turn to y/y growth is ex­pected in March.

‘Real re­tail trade

in Fe­bru­ary’

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