Manufacturing, mining and retail sales figures for June will dominate the local calendar this week, providing the final monthly inputs needed to gauge second-quarter GDP performance.
“Up to May, both average manufacturing and mining output were slightly above their first-quarter levels, indicating a potential positive contribution. Likewise, the available retail sales data shows a modest positive contribution to GDP,” said Tracey-Lee Solomon, economist at the Bureau for Economic Research.
Stats SA will release manufacturing production on Monday, mining output on Tuesday and retail sales on Wednesday.
Investec economist Lara Hodes said manufacturing production “rose marginally in May, by 0.5% year on year, following April’s marked 6.4% year-on-year slump. We project output to have lifted by around 1% year on year in June.”
She noted that conditions in the Absa manufacturing purchasing managers’ index survey remained subdued but improved modestly, alongside a slight recovery in global manufacturing conditions.
Nedbank economists forecast that manufacturing production rose by 0.8% in June, “supported by a low base following a sharp 4.7% contraction in the same month last year”.
Mining sector activity increased 0.2% year on year in May, after April’s contraction of 7.7%. Output is expected to continue the modest recovery in June: “We forecast activity to have lifted by around 1.4%,” Hodes said.
Nedbank, also forecasting 1.4%, added that “minimal load-shedding have also provided some relief”.
While commodity prices offered some support (the World Bank’s metals and minerals index and precious metals index both rose month on month in June), Hodes cautioned that “the country’s logistical challenges, however, including port and rail inefficiencies, continue to weigh on optimal activity and have led to billions of rands in lost revenue”.
Hodes forecast retail sales to have risen by about 2.5% year on year in June, slowing from May’s 4.2% gain. “Consumers have benefited from monetary easing, with a further interest rate cut announced in July. However, they still remain somewhat subdued in a low economic growth environment,” she said.
Nedbank expects retail sales to have increased by 3.8%.
The second quarter’s labour force survey is also due this week. In the first quarter, the unemployment rate rose to 32.9%, “a move not uncommon in the first quarter as seasonal employment winds down”, Solomon said.
Hodes expected it to remain largely unchanged at about 32.4% in the second quarter. “Indeed, the economic environment remains lacklustre, with GDP growth of just 0.9% expected this year.”
Nedbank sees a slight increase in employment thanks to stable power supply, easing logistical constraints and improving consumer spending. However, Nedbank economists warned that “the upside will partly be contained by heightened uncertainty surrounding the impact of the US tariffs on export-oriented industries”, leaving the unemployment rate high at about 33%.
On Tuesday, the department of trade, industry & competition and the department of agriculture will brief the media on the outcomes of the cabinet decisions on SA’s response to the 30% tariffs imposed by the US. The tariffs came into effect on Friday.
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