The release of third-quarter GDP on Tuesday will be the main focus this week, along with a survey of consumer confidence that reflects the shape of household finances as the country heads into the festive season.
GDP is likely to have slowed in the three months ended September compared with the March-June quarter despite the relative stability in the electricity supply.
The mining and manufacturing sectors are likely to have stagnated, outweighing the expected improvement in financial services and agriculture.
Mining and manufacturing have been labouring under the weight of tepid internal and external demand, compounded by the fallout from an inadequate electricity supply as well as inefficient rail and port infrastructure.
For the mining sector, export commodity prices remain weak on a relative basis, though iron ore prices have made a strong comeback in recent weeks amid hopes that top consumer China could introduce more stimulus to revive its property market.
The miners are also faced with elevated cost inflation and an inefficient rail network, which forced major players such as Kumba Iron Ore to stockpile on the mines, implying it may not be able to fully benefit from the recent pick-up in prices unless state-owned transport utility Transnet improves it rail network.
Transnet’s capacity to deliver services is being hampered by vandalism of its infrastructure, as well as the shortage of spare parts.
Manufacturers are being affected by the same challenges, as evidenced by last week’s announcement by ArcelorMittal SA that it planned to shut down its Newcastle and Vereeniging steel operations.
“We expect GDP essentially to have stalled in the third quarter,” Standard Bank economist Elna Moolman said. GDP will probably have grown 0.1% quarter on quarter.
Worst performers
“Notwithstanding the easing in load-shedding in the third quarter, the goods-producing sectors likely performed worst. Indeed, in recent years, the services sectors generally outperformed the goods-producing sectors — this is unsurprising given that the goods-producing sectors would generally be more affected by the binding infrastructure constraints.”
SA’s GDP will probably have grown 0.20% in the June-September, according to Trading Economics, slowing down from 0.6% in the second quarter.
“I expect negative quarterly growth rates for mining, manufacturing, and transport and communication,” said independent economist Elize Kruger. “Best sectoral performance is likely to come from the financial services sector, while small positive contributions are also expected from agricultural, electricity, personal and government services.”
The FNB/BER consumer index for the fourth quarter, compiled by the Bureau for Economic Research (BER) in partnership with FNB, will be released on Thursday.
The survey provides regular assessments of consumer attitudes and expectations and is used to evaluate economic trends and prospects.
FNB economists said in a note that confidence across the spectrum remains below the long-term average, highlighting concerns regarding general economic prospects.
“While consumer perceptions of the appropriateness to purchase durable goods at present are less pessimistic, views on expected household finances have barely changed. This suggests some contention within consumers, as softer inflation and continued job creation should allow slower real wage compression and strengthen spending capacity.”
SA’s current account balance data for the third quarter will also be released by the Reserve Bank on Thursday. As a percentage of GDP, the current account deficit was 2.3% in the second quarter, compared with a current account deficit of 0.9% in the first quarter.
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