This week’s domestic focus will be on consumer confidence and producer inflation, alongside the Reserve Bank’s Quarterly Bulletin, which will give further detail on the economy’s performance in the second quarter.
The Bureau for Economic Research (BER) is expected to release its Retail Survey on Monday and the Other Services Survey on Tuesday.
The FNB/BER consumer confidence index (CCI) for the third quarter follows on Thursday. BER chief economist Lisette IJssel de Schepper said the CCI “will be a key read to better understand [consumers’] position during the year’s second half. Consumer spending has been an important underpin of SA economic growth, and a faster-than-expected slowdown could undermine growth prospects.”
Retail sales started the third quarter strongly, but the CCI will provide a broader gauge of households’ willingness to spend.
After plunging in the first quarter, the index rebounded in the second quarter, climbing from minus 20 to minus 10.
“This rebound followed a series of economic and political disruptions, including proposed VAT increases, political tensions and deteriorating relations with the US,” said Motheo Tlhagale, investment analyst at FNB Wealth and Investments.
“All three subindices — economic outlook, household finances and the time to buy durable goods — showed improvement, with household finances turning positive,” he said.
Producer inflation data
Stats SA will also release August producer inflation data on Thursday. IJssel de Schepper said the producer price index (PPI) was expected “to remain unchanged at 1.5% year on year in August”. She said a slight acceleration to just above 2% was expected during the remaining months of the year.
Nedbank economists see factory gate prices climbing faster, from 1.5% in July to 1.8% in August.
“The upward pressure will mainly come from food products, beverages and tobacco. Within this category, food prices will continue to be driven by higher meat prices given the ongoing battle against foot-and-mouth disease,” they said.
Favourable weather should help keep crop prices in check, they said, while lower global oil prices and a firmer rand deepened the annual decline in petrol and diesel prices to 7.4% and 7.5%, respectively.
Nedbank added that the Quarterly Bulletin, also out this week, was likely to show some improvement in household finances in the second quarter after deteriorating in the first quarter.
“The boost will come from higher wages and subdued inflation, which will support disposable income, while lower interest rates will ease debt burdens,” they said, adding that two-pot withdrawals would also contribute.
“However, the increase in household finances will partly be contained by poor employment.”
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