The focus in the week ahead will be on the third-quarter Quarterly Employment Statistics (QES) due on Thursday. The Bureau for Economic Research (BER) at Stellenbosch University said the QES provides an estimate of non-agricultural formal employment and income trends the country.
In their opinion the temporary jobs created to run the May election and boosted QES employment in the second quarter, is likely to fall away in the third quarter.
The other major focus for economists will be the Reserve Bank’s Quarterly Bulletin due on Friday. This provides a mass of data, but economists will be looking at how the consumer performed in the third quarter with respect to household debt to income ratio and debt service costs.
The slew of October releases (mining, manufacturing and internal trade sales) means we should get a sense of how the economy started the fourth quarter of the year after a disappointing third quarter. The BER noted that mining production was pretty strong in the previous month, while manufacturing production was weaker than expected.
Nedbank expects a moderate decline in manufacturing production of 0.3% year on year, less severe than the 0.8% year-on-year drop in September. They forecast 1.5% year-on-year growth in mining production, compared with 4.7% year on year in September. Electricity distributed to the Free State, where several gold mines are located, surged 7.4% year on year in October. Nedbank forecast retail trade sales will grow by 2% year on year, propped up by firmer real incomes, lower inflation and the gradual recovery in consumer confidence as interest rates decline.
Wednesday sees November consumer inflation released, while on Thursday it is the producer price inflation print for November.
The BER expects a slight acceleration in headline consumer inflation to 3.2% year on year in November after it dipped to just 2.8% year on year in October. However, at 3.2% it remains well below the 4.5% target of the Reserve Bank. Core inflation is expected to remain below 4% in November. The Nedbank Group Economic Unit expects a marginal uptick to 3.1% year on year.
Producer prices dipped into negative territory in October, but the BER expects this to turn around in November with another slight annual increase. Nedbank forecasts a 0.2% year-on-year increase in November after declining by 0.7% in October, reflecting higher fuel prices. Trading Economics is not convinced that the deflationary trend is over and expects a 0.3% year-on-year drop.
The BER will release the fourth-quarter inflation expectations survey on Thursday. The markets and Reserve Bank will be keen to see if the recent downtick in actual inflation has translated into an easing in inflation expectations.
There are a few interest rate decisions on the global front, but the most important will be the European Central Bank (ECB) decision on Thursday. While there remains much uncertainty around president-elect Donald Trump’s affect on the global economy, markets have taken the view that it would imply more easing by the ECB than expected before.
Some have floated the idea of stepping up the pace with a 50 basis points (bps) cut in December, but other ECB members have been more cautious. The consensus view is for a 25bps cut. In contrast to more expected cuts by the ECB, markets expect fewer cuts by the US Federal Reserve and will keenly watch the US consumer inflation print out on Wednesday.
A speech by Fed chair Jerome Powell last week was seen as suggesting that the US economy and labour market remain strong to such an extent that fewer rate cuts may be implemented.
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