Focus on Reserve Bank’s rate decision

THERE will be a flurry of data releases next week, but the focus of economists will be on the decision by the SA Reserve Bank (Sarb) Monetary Policy Committee (MPC) on Thursday.

Economists do not expect any change in the key repo rate after the MPC voted four to three to cut the repo rate by 25 basis points to 6.5% at their last meeting in March. Since then the rand has weakened, the oil price has increased and VAT went up from 14% to 15%. All of these factors will have raised the inflation trajectory, but not to the extent that the MPC will be contemplating a rate hike just yet.

The week starts off with a flurry of minor statistical releases. The March figures for land, transport, food and beverages, and tourism accommodation, and April’s steel production data will show how different sectors of the economy are performing.

Income from tourism accommodation fell 3% yearon- year ( y/ y) in February after a revised 2.9% (2.5%) y/y increase in January and there should be a return to a y/y increase in March.

The number of stay units sold for the total industry fell 4.6% y/y in February after a revised 1.5% ( 0.4%) y/ y increase in January.

The tonnage transported by land rose 9.5% y/y in February after increasing 9.2% in 2017. A smaller y/y increase is expected in March due to the Easter holidays. The February rise was driven by a 12.4% y/y jump in the tonnage moved by road after a 9.3% y/y gain in January.

Rail transport is, however, lagging with only a 2.0% y/y rise in February after a 2.7% y/y drop in January.

Nominal income in the food and beverage industry rose 7.7% y/ y in February