The quarterly labour force survey for the third quarter is due to be released on Tuesday.
The Nedbank Economic Unit said that stable power supply, reduced policy and political uncertainties, and some improvement in global and local economic conditions boosted business confidence over the quarter, which could have resulted in a slight improvement in employment growth.
Nedbank cautioned, however, that the unemployment rate is likely to remain high. A meaningful reduction in the unemployment rate is only likely to occur next year as structural reforms create space for moderately faster economic growth and potentially higher fixed investment.
The Bureau for Economic Research (BER) at Stellenbosch University said SA’s labour data is sometimes difficult to gauge and can be volatile, but the BER would be surprised to see a surge in employment in the third quarter.
Trading Economics expects the third-quarter unemployment rate to ease to 32.9% from the second quarter’s 33.5%.
The BER said the manufacturing and mining data for September (to be released on Tuesday and Thursday, respectively) are keenly awaited to better understand how the absence of load-shedding affected production in the third quarter. Quarter-closing monthly data is always of interest to get a better understanding of full-quarter GDP dynamics.
Manufacturing output fell in August after a solid July, with September largely determining whether the quarter would see an increase or not. The increase in the Absa purchasing managers’ index (PMI) in September suggests that it is likely to be a positive print, which would be a boon for GDP. The mining production data would need to be very positive in September for it to expand on a quarterly basis.
Nedbank said manufacturing production likely rebounded by about 1.1% year on year in September, after shrinking by 1.2% in August. Nedbank expects mining production to increase by about 2.2% year on year in September from modest growth of 0.3% in August. Output in both sectors is likely to recover off last year’s low base, supported by the absence of load-shedding. Electricity consumption grew by 5.7% year on year in the third quarter. Both manufacturing and mining are large users of electricity.
Trading Economics is not as optimistic and has forecast a 2% decline in manufacturing production in September, while it expects mining production to expand by only 1.6%.
On the international front, the BER said there is consumer and producer inflation data for the US due this week. While unlikely to derail the Federal Reserve’s interest rate cutting trajectory, surprises in the consumer inflation print could cause some market volatility. Nedbank noted that the market expects US core inflation to remain at 3.3% year on year, while headline inflation is forecast to rise to 2.6% from 2.4%.
Third-quarter GDP data for the UK, Japan and Russia are also due for release. All three countries are likely to see growth momentum slow but remain in positive terrain. Trading Economics forecasts that Russian GDP growth will slow to 2.8% year on year from 4.1%, while Japanese growth should slip to 0.2% quarter on quarter from 0.8%. UK growth is expected to ease to 0.2% quarter on quarter from 0.5%.
China will release a large batch of economic data for October, offering insights into the initial effect of monetary stimulus, while investors will continue to mull the effect of the government’s 10-trillion yuan debt swap with local governments. The data releases will include industrial production, retail sales, new yuan loans and other credit aggregates, housing prices, the unemployment rate and car sales.
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