ECONOMIC WEEK AHEAD: S&P ratings call, job and mining stats test SA’s macro narrative

With first-quarter employment data, March mining production figures and an S&P Global ratings review due this week, investors and policymakers will be watching closely for signals on work force resilience, industrial momentum and fiscal credibility.

All eyes will be on S&P Global, which is expected to announce its SA sovereign credit rating decision on Friday.

In November, S&P revised the outlook on SA’s rating from stable to positive, citing encouraging signs in fiscal reform and growth prospects under the government of national unity (GNU). An upgrade from its current BB-rating would mark a key vote of confidence.

The agency noted in its last review that an upgrade was possible if economic growth outperformed expectations and if government debt stabilised faster than projected. Central to its decision will be whether recent GNU volatility and modest growth momentum dented those expectations.

Stats SA will publish the quarterly labour force survey for the first quarter on Tuesday.

In the fourth quarter of 2024, the unemployment rate eased slightly to 31.9%, supported by an increase of 132,000 jobs. However, first-quarter data traditionally reflects seasonal job losses and an influx of school-leavers, often nudging the unemployment rate higher.

Investec economist Lara Hodes expects unemployment to have edged up to about 32.1%, citing persistent weakness in domestic growth.

“A marked lift in sentiment, investment and, accordingly, economic growth is required to see an increase in employment on a sustainable basis,” she said.

Nedbank economists expect a similar uptick, warning that uncertainty around the US trade war and “the disagreements within the GNU” could deter business expansion in the near term.

“The unsettled environment will likely convince companies to adopt a wait-and-see approach,” they noted.

March mining production data, due on Thursday, will complete the first-quarter data set for the sector.

Mining output dropped sharply by 9.6% year on year in February, with platinum group metals leading the declines. 

Hodes expects another weak reading due to base effects and soft global demand.

“Heightened uncertainty globally due to the disruptive trade war remains a key risk to global growth and demand for essential commodities, weighing on SA’s export potential,” she said.

Lisette IJssel de Schepper of the Bureau of Economic Research echoed this outlook. “Mining is unlikely to do much better with a quarter-on-quarter decline expected,” she said.

Nedbank expects month-on-month growth of 3.7%, but a

year-on-year contraction of 2.3%.

It warns that similar to manufacturing, mining remains constrained by domestic bottlenecks and global headwinds that are likely to affect first-quarter GDP.

The crop estimates committee will release its final production figures for the 2023/24 summer crop season on Thursday.

The agriculture sector — valued at more than R100bn and critical to employment and export earnings — faced severe strain in 2024. In the third quarter, the sector plunged by 28.8%, later revised to a steep 19.7% drop (quarter on quarter, seasonally adjusted), marking one of the sharpest contractions in decades and dragging down overall GDP.

In February this year, Business Day reported that the committee’s 2023/24 summer crop figures painted a tough picture for the agriculture sector, as final summer figures showed only modest improvements from previous estimates, while confirming the damage inflicted by last year’s midsummer drought.

marxj@businesslive.co.za