Bonanza of data releases expected to give economy a good start for year ahead

ECONOMIC WEEK AHEAD

THE New Year’s holiday disruptions will result in a heavy data week as several data releases normally made in the first week of the month were postponed to the second week.

These postponed releases include new vehicle sales and the Absa Purchasing Managers Index (PMI).

The normal second week data releases are the SA Chamber of Commerce and Industry (Sacci) Business Confidence Index (BCI), tourism data and manufacturing data, as well as bulk exports and tractor sales.

In 2016, new vehicle sales fell 11.4% to 547 442 units and at the beginning of last year the industry body expected sales to recover to 561 000 for the full year 2017.

Economists will be interested to see how much higher the actual figure will be, as from the second quarter onwards, economic data releases have tended to come in above the consensus forecast.

The Absa PMI rose to 48.6 in November from 48.3 in Octo- ber and 45.1 in September, and a further rise is expected in December, but the PMI is still likely to remain below the 50 level, which is the breakeven level between expansion and contraction for the manufacturing sector.

Manufacturing production increased 2.2% year- on- year (y/y) in October after a 1.7% y/y drop in September and a 1.8% y/y gain in August, and economists expect another y/y increase in November given the depletion of inventories during the third quarter as sales exceeded expectations.

The October increase was due to a 7.3% y/y jump in food and beverages production as the record maize harvest is processed, while basic iron and steel, non-ferrous metal products, metal products and machinery grew 5.8% y/y on robust export demand and these two sectors should continue to provide support in November.

The SACCI BCI rose to 95.1 in November from 92.9 in October and a further increase should be expected in December. The BCI is due for release on Wednesday.

On Thursday, the October tourism data is due for release. Xenophobia and the strong rand is slowing tourism growth with only a 2.2% y/y increase in August after a 4.8% y/y gain in July.

The spate

of

terrorist attacks overseas could, however, boost numbers from America and Europe and this could be reflected in the October tourism data.

Agriculture and mining have been the growth pillars in 2017 and their impact should be reflected in the December bulk export data.

Although bulk exports fell by 7.7% y/y in November to 15 million tons (Mt) after soaring 30.7% y/y in October to a new record of 16.7 Mt, economists expect a rebound in the December data so that the total 2017 bulk exports should set a new record.

The October jump was due to a massive 64.3% y/y increase in bulk exports out of Saldanha, which are mostly iron ore, after a 41.3% y/y slump in September.

Bulk exports out of Richards Bay, which are mostly coal, plunged 25.8% y/y in November after a 13.3% y/y gain in October.

Bulk exports out of the other ports, which are a mix of grains, sugar and manganese ore, rose 23.6% y/y in Novem- ber and 26.6% y/y in October after almost doubling with a 94.9% y/y increase in September, a 18.5% y/y rise in August and a 64.4% y/y surge in July.

Tractor sales surged 24.9% y/y in November to 566 units.

This followed an 11.3% fall in 2016 to 5 855 units when drought conditions prevailed in the summer rainfall area.

In the first 11 months of last year, tractor sales were up 8.0% y/y and there should be a double-digit y/y gain in December to round off a strong farming recovery year.