This week a slew of economic data releases will indicate the underlying health of SA’s economy but by far the most critical will be fourth-quarter unemployment, expected to have worsened to yet another record.
Stats SA is scheduled to publish its Quarterly Labour Force Survey on Tuesday, which economists expect will show unemployment rose to a record 35.1% in the fourth quarter, up from a previous record 34.9% in the previous three months, the highest jobless rate since comparable data began being collected in 2008, according to the median estimate of a Bloomberg survey of eight analysts.
“The weakness in the SA labour market has been exacerbated by the Covid-19 pandemic and will see a slow recovery in employment given the low growth and fixed investment prospects,” said Investec economist Lara Hodes.
Data on private-sector credit extension for February is due on Wednesday with the median estimate of a Bloomberg survey showing it is likely to have risen slightly by an annual 3.3%, up from the 3.1% expansion in January. Money supply data for February is also scheduled for release on Wednesday with economists expecting to see M3 money supply expanded 5.7%, moderately higher than the 5.65% in January, according to the median estimate of a Bloomberg survey.
“Following several months of contractions credit extended to the corporate sector has picked-up in line with a rebound in economic activity as Covid-19-related restrictions have eased markedly,” said Hodes. “Business confidence has also increased moderately but remains subdued. A sharp rise in sentiment is required to boost investment and accordingly credit demand.”
Producer price inflation (PPI) data for February is scheduled for publication on Thursday and is expected to show that inflationary pressure on SA factories remained elevated thanks in part to fuel price hikes that same month. PPI is expected to have edged up to an annual 10.2% in February, up from 10.1% in January, according to the median estimate of seven analysts polled by Bloomberg before the data release.
Economists are concerned that the supply chain disruptions and commodity price spikes caused by Russia’s invasion of Ukraine could exert further inflationary pressure on local producers and consumers. Food inflation in particular is expected to accelerate in coming months as agricultural commodity prices rise, along with farming inputs such as fertiliser.
Thursday will also see the publication of SA’s trade balance for February with the median estimate of economists surveyed by Bloomberg indicating they expect a R21.9bn surplus, up from a R3.6bn surplus in January, as the nation’s export earnings continue to benefit from elevated commodity prices.
“The month of January typically sees an increase in imports from the seasonal decline in the month of December, accordingly we expect the surplus to have widened again in February,” said Hodes.
Friday will see the publication of Absa’s purchasing managers index (PMI), a gauge of factory activity, which is expected to have benefited from the ongoing export bonanza with economists expecting that the measure likely stayed well above 50 in March. The median estimate of a Bloomberg survey shows the PMI likely reached 58.3 in March, moderately down from the 58.6 level in February.
PMI data measures the manufacturing sector’s health monthly by polling the purchasing managers of factories across SA on whether business condition indicators such as sales orders have increased, decreased or remained unchanged from previous months. Their answers are converted into an index with a value of 50 indicating no change in activity, a reading above 50 showing expansion and a sub-50 measure revealing a drop in activity.
The National Association of Automobile Manufacturers of SA (Naamsa) is due to publish new vehicle sales data for March on Friday. The median estimate of a Bloomberg survey of analysts shows they expect new car sales growth to have dipped to 4.1% in March, down from 18.4% in February.
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