ECONOMY: FNB Economics Weekly
Recent Gauteng Business News
·SA: The better than expected CPI print gives us comfort in our 6.2% y/y annual average forecast. While the rand remains a risk, expected improvements in food prices could be a mitigating factor.
·SSA: The pending IMF support package in Zambia following the elections is expected to provide welcome relief. It should ease liquidity conditions and help reduce pressure on the currency. But as with every bailout package, it will come with significant austerity conditions.
·Global: US new home sales shot the lights out increasing 12.4% m/m while US existing home sales contracted 3.2%; however, economic fundamentals in the US housing market remain strong.
The Week Ahead
Next week will see the release of a host of economic data, among them the Barclays/BER Purchasing Manager’s Index (PMI), August vehicle sales, private sector credit extension, budget and trade figures, as well as electricity consumption and production. Local markets, however, will likely continue to be guided by developments in the stand-off between the Hawks and the Minister of Finance. Having lost almost a full rand to the US dollar, even very encouraging trade figures are unlikely to drive the currency materially stronger.
Nevertheless, we expect a modest trade surplus despite the 1.2 index point drop in the July PMI numbers, which continues to hold above the crucial 50 point mark at 52.5. We are less optimistic about new vehicle sales, which despite our contention that base effects should begin
to moderate the rate of decline, have consistently disappointed. Having reaccelerated to 7.3% y/y in June, private sector credit extension growth is likely to soften somewhat primarily as a result of the African Bank data working its way through the base. Corporate credit extension has been holding the headline number up, with household credit growth registering on 2.1% y/y for June.
Business News Sector Tags: Economy|