SA’s economic calendar this week is headlined by May’s producer price inflation (PPI), fresh readings on consumer confidence and formal sector employment statistics.
Stats SA will publish the quarterly employment survey (QES) on Tuesday for the formal non-agricultural sectors, covering the first quarter.
In the fourth quarter, formal sector jobs rose marginally by 12,000 (0.1% quarter on quarter), with trade gaining but community services continuing to decline.
For the first quarter, Investec economist Lara Hodes expects a small quarter-on-quarter contraction.
Stats SA will release the PPI data for May on Thursday. Analysts expect producer inflation to remain muted, supported by lower fuel costs and ongoing global disinflationary trends.
Hodes expects PPI to rise by just 0.6% year on year, from 0.5% in April, and 0.2% month on month.
“The petrol price declined by a modest 22c per litre in May, while the diesel price fell by just over 40c per litre, accordingly the coke, petroleum, chemical, rubber and plastic products grouping (in which fuel price dynamics are measured) is likely to detract somewhat from the headline reading,” she said.
“Manufactured food price inflation, a key driver of inflation, could however increase further in May, after rising to 4.9% year on year in April (from 4.7% year on year in March), underpinned in part by higher meat and meat products’ prices.”
Nedbank economists echoed this subdued outlook, forecasting an increase to 0.8%, driven by a modest rebound in food price pressures but tempered by lower fuel and imported input costs.
“Production costs in most of the other components are also expected to have remained contained, reflecting some improvement in infrastructure constraints and less disruptive load-shedding,” the economists said.
Also on Thursday, the FNB/BER consumer confidence index (CCI) for the second quarter will be released.
The CCI plunged to minus 20 in the first quarter, driven by heightened uncertainty over the longevity of the government of national unity, concerns about the VAT hike in budget 1, and escalating global trade tensions.
Investec anticipates a rebound to about minus 12 in the second quarter, “on an improvement in political certainty” but warns that overall sentiment remains weak in a “low growth economy, while globally in the impact of tariffs remains highly uncertain”.
The Reserve Bank will also release its quarterly nulletin on Thursday, providing further details on the economy’s performance in the first quarter.
“Personal finances are expected to have improved further as disposable income was boosted by lower inflation and withdrawals from the two-pot retirement savings,” Nedbank said.
In parallel to the week’s data releases, SA continues its role at the helm of the Group of 20 (G20) through the B20 business engagement track.
This week features the B20 SA Virtual Media Round Table, the first of a planned series of quarterly engagements. The session will spotlight five key strategic voices behind the B20’s agenda and provide insights into business priorities under the country’s G20 presidency.
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