Black Friday, the day after Thanksgiving, which this year is on Thursday November 28, will be a test of how buoyant consumer demand is. Many retail outlets started their Black Friday promotions days, if not weeks, ago.
Tuesday will see a flurry of data releases with the September leading indicator, international tourism, land transport, tourist accommodation, as well as food and beverages all due.
Wednesday will be relatively quiet with only October liquidations data to be released.
On Thursday, there will be producer inflation data. In common with consumer inflation, this data has come in below expectations in recent months.
The Nedbank group economic unit expects producer prices to be zero year-on-year from 1.0% year-on-year in September. It said there was even a possibility that producer prices could enter deflation, given the higher base established last year, when voluntary production cuts by Saudi Arabia and Russia combined with Israel’s response to the Hamas terrorist attacks caused global oil prices to spike.
Food prices would also be dragged down by a high base, reflecting shortages caused by the bird flu outbreak. Therefore, Nedbank expects the downward pressure in October to emanate from fuel and food prices.
In addition to the base effects, the petrol and diesel prices fell sharply in October due to the lower Brent crude oil price and a stronger rand/dollar exchange rate. The downside on food prices will partly be contained by the lingering impact of dry weather conditions earlier in the year.
The Bureau for Economic Research (BER) at Stellenbosch University has a similar expectation, saying producer price pressures have likely remained subdued.
On Friday there will be October money supply, fiscal balance and foreign trade data. Investec expects private sector credit extension to have lifted further in October, albeit modestly, following September’s 4.6% year-on-year increase, which was buoyed by the corporate sector of the market. Investec forecasts a 5.7% year-on-year rise in private sector credit extension.
Nedbank is not as optimistic and forecast private sector credit extension to increase by 4.8% year-on-year. Growth in household demand could also pick up slightly, reflecting some improvement in consumer confidence due to growth in disposable income, lower inflation and the first interest rate cut in September.
Most economists expect the October foreign trade surplus to narrow, but a swing to a deficit should not be ruled out as imports normally surge in October so that retailers have stock for November Black Friday deals and December Christmas shopping. In October 2023 there was a R25.7bn deficit.
Investec expects a narrowing to an R8bn surplus from September’s R12.8bn, while Nedbank only forecasts a R6.7bn surplus as imports likely rose faster than exports.
Nedbank noted that economic growth in SA’s key trading partners remains relatively modest, weighing on demand for commodities.
Apart from gold, the prices of most other essential commodities remained muted. In contrast, imports probably advanced on stronger domestic demand, given lower domestic inflation, improved confidence, a relatively stronger rand and the start of the rate-cutting cycle.
Trading Economics forecasts only a small deterioration as it expects a R10bn surplus.
Internationally the focus will be on the US personal consumption expenditure price index, where the consensus forecast is for a rise to 2.2% year-on-year in October from 2.1% year-on-year in September.
Elsewhere, inflation figures from Australia, the eurozone, France, Germany, Italy, Poland and Spain will be closely watched. Canada, India, Switzerland and Turkey will release their latest economic growth rates.
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