SA’s economic calendar shifts into lower gear this week after a data-heavy start to June.
Attention will turn to key sector data — manufacturing and mining production — while on Wednesday the National Assembly is expected to debate the revised fiscal framework adopted by the finance committee last week.
The framework, which underpins the third version of the national budget presented by finance minister Enoch Godongwana on May 21, passed the committee stage with backing from the ANC, DA and ActionSA. This despite strong objections from the EFF and MK party, which argued the framework lacked sufficient pro-poor focus.
The framework includes updated revenue, expenditure, borrowing and deficit projections, and signals the Treasury’s fiscal stance amid a fragile political settlement under the government of national unity (GNU).
On Tuesday, the Western Cape High Court dismissed the EFF’s urgent application seeking the suspension of the fuel levy increase, which took effect on Wednesday. This sets in motion Godongwana’s plans to raise revenue of almost R4bn per annum in implementing the hike.
The first two budgets were rejected because of the National Treasury’s proposal to hike VAT.
Should the National Assembly approve the framework, the next step will be the passage of the full Appropriation Bill, essential to avoid a fiscal deadlock four months into the financial year.
On the economic calendar, attention turns to sectoral performance with the release of April’s manufacturing and mining production data on Tuesday and Thursday, respectively.
Manufacturing contracted by 2% quarter on quarter (seasonally adjusted) in the first quarter, according to last week’s GDP figures.
April’s data is expected to show further weakness, with the Absa manufacturing PMI for April and May remaining in contractionary territory.
Investec economist Lara Hodes forecasts a sharp decline of about 4% year on year, after March’s minus 0.8% year-on-year drop.
Mining production continues to underperform, hampered by persistent electricity constraints and logistics backlogs. March’s production fell by 2.8% year on year, and Hodes projects a further contraction of 5.5% year on year in April.
She noted that the World Bank’s metals and minerals price index fell by 7% month on month in April, highlighting ongoing headwinds.
After easing in March, electricity and water costs rose sharply in April, adding to pressure on mining companies — particularly gold and platinum group metals (PGM) producers.
Still, PGM output rebounded in the first quarter, offering some relief to the sector.
On Monday, the FNB/BER building confidence index for the second quarter of 2025 will be released. In the first quarter, the index edged up slightly to 41 points from 40 points previously, reflecting weak but stable sentiment across the building sector.
According to Khumbulani Kunene, investment analyst at FNB Wealth & Investments, “concerns regarding municipal inefficiencies and the potential for unfulfilled expectations pose risks to the near-term outlook”.
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