SA’s trade balance data and producer inflation figures will be the likely highlights in a busy economic week ahead, and may give insight into the severity of supply chain bottlenecks, including problems on Transnet’s railway network.
The producer price index (PPI) for September will be published by Stats SA on Thursday, with the consensus expectation among four economists polled by Bloomberg for it to be unchanged at 7.2% in September.
August’s figure represented a slight increase month on month, driven largely by components affected by fuel prices, which remain a headwind for the global economy, along with a supply chain crunch that has clogged up big ports globally.
Stanlib chief economist Kevin Lings expects PPI to pick up to 7.5% in September, saying data on price pressure in agriculture and manufacturing will be closely watched. “Globally there is significant food price pressure, so we need to monitor the extent to which this is impacting SA,” he said.
Policymakers in many developed nations maintain that global inflationary pressures are transitory and that once supply chain issues stemming from the Covid-19 pandemic are resolved, prices pressures will ease.
Energy prices, however, remain elevated, with Brent crude oil still hovering at a three-year high, having risen 8% since the end of September, leading to expectations SA motorists will face record fuel prices in November. At the same time that SA is facing higher energy costs, miners are reporting that they are missing out on exports due to a series of issues with the rail network, notably cable theft.
The Reserve Bank’s leading business cycles indicator for August is due on Tuesday, which will show a projection of SA’s economic growth cycle for the next six to 12 months.
The indicator is based on a range of components, including the number of approved building plans, job advertisement space, the Bureau for Economic Research (BER) business confidence index, manufacturing order volumes and passenger vehicles sold.
The indicator had dipped 2.5% month on month in July. Nine of the 10 components registered a decrease, with the exception of residential buildings. The number of vehicles sold and manufacturing production took a hit from civil unrest in that month.
Friday will see the release of private sector credit extension numbers for September, with economists expecting a lift from August's 1.12% growth, with estimates ranging from 1.4% to 2.1%.
Investec economist Lara Hodes, who expects a modest rise to 1.4%, said in a note that household credit would have got a boost from the easing of Covid-19 restrictions on September 13, but corporate credit demand is likely to remain depressed.
“A subdued economic environment and uncertainty around the timing and strength of a recovery continue to dampen business confidence levels, hindering corporate sector activity,” she said in a note.
Data on Friday is expected to show that SA’s trade surplus narrowed in September, having rebounded to R42.4bn in August, when SA was recovering from the disruptive effects of July’s civil unrest.
Absa said its narrow rand-denominated export commodity prices index fell by 12.9% month on month in September, boding ill for export prices. Meanwhile, import prices were likely boosted by the rand price of Brent crude oil rising by 2.2% from August.
“However, the terms of trade remain elevated overall, which should continue to support strong merchandise trade surpluses, though Transnet’s rail difficulties are impairing bulk mineral export volumes,” Absa economists said in a note.
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