Absa’s purchasing managers’ index (PMI), compiled by the Bureau for Economic Research (BER), will kick off the week’s economic calendar on Monday with the impact of the Middle East war certain to have filtered through to the April print.
The PMI edged up to 49 in March from 47.4 in February, but the reading still pointed to the sixth consecutive month of contraction in the country’s manufacturing sector. At the time, Absa said the results suggested that the sector had not yet experienced a significant slowdown due to the US-Israel war against Iran, “but price pressures have intensified sharply”.
The BER has already warned that recent steep fuel price increases will keep input costs elevated, placing additional strain on manufacturers’ profitability and potentially contributing to broader inflationary pressures in the economy.
Also on Monday, the Automotive Business Council will release new vehicle sales data for April. The previous report showed growth in March, buoyed by domestic macroeconomic support, even as the broader environment began to shift towards a more constrained outlook.
Aggregate domestic new vehicle sales were 58,060 units, the best March figures since 2007. But export sales decreased to 37,388 units — a year-on-year loss of 5.3%.
“We expect new vehicle sales to contract by 16% month on month in April, largely reflecting more public holidays than in March and softer demand amid uncertainty over the war in Iran,” economists at Nedbank predicted in a note.
“Higher fuel prices and a shifting interest rate outlook are likely to weigh on consumer confidence and, in turn, vehicle demand.”
Later in the day, South African Reserve Bank (SARB) governor Lesetja Kganyago will deliver a public lecture at Rhodes University, Eastern Cape, discussing the country’s resilience as global markets navigate the inflation surge caused by the Middle East conflict.
Despite the global turmoil, the Bank says South Africa’s stable inflation and low expectations provide a strong buffer, and while prices will rise above 3% in the short term, the policy priority is ensuring that the shock is transitory, not persistent, so that inflation returns to the 3% target.
In its monetary policy review on April 22, the bank warned that the risks of second-round effects on inflation were skewed to the upside amid uncertainty about the duration of the Middle East war.
On Thursday, Stats SA will release a report on the electricity, gas and water supply industry for 2024 and another one on the electricity generated and available for distribution during March.
The next day, the SARB will publish the latest numbers on the country’s gold and foreign exchange reserves. Gross reserves are expected to be largely stable at $77.72bn in April from $77.76bn in March, Nedbank said.
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