Tuesday December 06 2016
South African GDP Growth Steady at 0.7% YoY in Q3
Statistics South Africa l Rida Husna | rida@tradingeconomics.com

The South African economy advanced 0.7 percent year-on-year in the September quarter of 2016, the same from an upwardly revised figure in the second quarter. It was the second straight quarter of growth, as an increase in finance & real estates activities, construction and transport & communication offset a decline in the agriculture, mining and manufacturing.

The finance, real estate and business services recorded the fastest growth (+1.8 percent from +2.2 percent in the prior quarter), followed by general government services (+1.7 percent from +1.7 percent), personal services (+1.4 percent from +1.0 percent); transport, storage and communication (+0.1 percent from +0.1 percent); trade, catering and accommodation (+0.5 percent from +1.8 percent), construction (+1.4 percent from +0.3 percent).  

In contrast, production fell for manufacturing (-0.4 percent from +3.6 percent), agriculture (-3.6 percent from -12 percent) mining (-0.1 percent compared to -3.4 percent) and electricity, gas and water (-1.8 percent compared to -2.6 percent).

On a seasonally adjusted annualized basis, the economy expanded 0.2 percent, compared to an upwardly revised 3.5 percent growth in the June quarter and below market estimates of a 0.5 percent expansion. It was the second straight quarter of growth.




Tuesday December 06 2016
South Africa GDP Growth Slows to 0.2% QoQ in Q3
Statistics South Africa l Rida Husna | rida@tradingeconomics.com

The South African economy expanded an annualized 0.2 percent on quarter in the three months to September of 2016, compared to an upwardly revised 3.5 percent growth in the June quarter and below market estimates of a 0.5 percent expansion. It was the second straight quarter of growth, mainly supported by mining, general government services and real estate activities while manufacturing shrank.

The largest contributor to GDP growth was mining and quarrying,  growing 5.1 percent and contributing 0.4 percentage point. This was largely the result of increased production in the mining of ‘other’ metal ores, in particular iron ore.

General government services advanced 1.8 percent and contributed 0.3 percentage point to growth.

Growth in finance, real estate and business services went up 1.2 percent and contributed 0.2 percentage point to growth. Activity increased for financial intermediation, auxiliary activities and real estate services.

In contrast, manufacturing industry contracted by 3.2 percent, compared to a 8.1 percent expansion the the June quarter. Notable decreases were reported by the petroleum products, chemicals, rubber and plastic division; the basic iron and steel, non-ferrous metal products, metal products and machinery division; and the food, beverages and tobacco division. The output for electricity, water and gas shrank 2.9 percent, compared to a 1.8 percent decline in the June quarter,  largely due to a decline in electricity consumed. Similarly, the amount of water distributed decreased, mainly driven by continued dry conditions and water restrictions in most parts of the country. The agricultural sector shrank 0.3 percent, following a 0.8 percent decline in the previous period. It marks the seventh consecutive quarter of contraction due to severe droughts, mainly due to a decline in horticulture products.

Year-on-year, the economy grew by 0.7 percent, the same from an upwardly revised figure in the second quarter.





Wednesday November 30 2016
South Africa Trade Balance Swings to Deficit in October
South African Revenue Service | Joana Ferreira | joana.ferreira@tradingeconomics.com

South Africa posted a trade deficit of ZAR 4.41 billion in October 2016 from an upwardly revised ZAR 6.95 billion surplus in September, but better than market expectations of a ZAR 10.5 billion gap. Exports fell by 11.1 percent, dragged by lower sales of vegetable products and precious metals and stones; while imports increased by 0.4 percent, as purchases rose mainly for mineral products and machinery and electronics.

Exports declined by ZAR 10.97 billion, or 11.1 percent, to ZAR 88.19 billion from ZAR 99.16 billion in September, dragged by lower sales of vegetable products (-48 percent), precious metals and stones (-25 percent), vehicles and transport equipment (-10 percent), chemical products (-7 percent) and mineral products (-2 percent). South African exports major destinations were China (8.9 percent of total exports), the US (7.4 percent), Germany (7.1 percent), Botswana (5.5 percent) and Japan (5.4 percent).

Imports rose by ZAR 0.39 billion, or 0.4 percent, to ZAR 92.60 billion from ZAR 92.21 billion the previous month, as purchases went up for mineral products (+5 percent), machinery and electronics (+5 percent) and chemical products (+4 percent). Meanwhile imports fell for vegetable products (-26 percent) and vehicles and transport equipment (-5 percent). The main sources of imports to the country were China (21 percent of total imports), Germany (11.6 percent), the US (6 percent), India (4.1 percent) and Japan (3.7 percent).

Considering the first ten months of 2016, the trade deficit shrank to ZAR 14.35 billion compared to ZAR 59.50 billion the same period a year earlier, as exports went up 5.6 percent and imports grew at a much slower 0.3 percent.

Excluding trade with neighboring Botswana, Lesotho, Namibia and Swaziland, the country posted a trade balance deficit of ZAR 13.92 billion in October. 




Thursday November 24 2016
South Africa Keeps Key Rate Unchanged at 7%
Mojdeh | mojdeh@tradingeconomics.com

The South African Reserve Bank left its benchmark repo rate on hold at 7 percent at its November of 2016 meeting, as widely expected. Policymakers said growth in the third quarter is expected to be positive, but below the level of June quarter, while left the GDP forecasts unchanged from September. The inflation reached to an 8-month high in October, after food prices picked up the most since 2009 due to severe drought, but it is expected to moderate in early 2017. The bank also noted the rand will be sensitive to changes in the stance of the US monetary policy.

Excerpts from the statement issued by Lesetja Kganyago:

The domestic economic growth outlook remains subdued, although the low point of the cycle appears to be behind us. The Bank’s forecast  remains unchanged at 0.4 percent for 2016, and 1.2 percent and 1.6 percent for the next two years. While the estimate for  potential GDP growth was revised down marginally to 1.3 percent, and rising to 1.5 percent by 2018, the output gap is expected to remain negative over the forecast period. The Bank’s composite leading business cycle indicator improved in August and September, continuing a recent generally positive but gradual upward trend.

Slow growth in household disposable incomes is also reflected in a gradual decline in wage growth, with growth in nominal remuneration per worker declining to 5.8 percent in the second quarter. When an adjustment is made for the increase in labour productivity, growth over four quarters in nominal unit labour costs measured 5.1 percent in the second quarter. The Andrew Levy Employment Publications Survey reports an average wage settlement rate in collective bargaining agreements of 7.5 percent in the first three quarters of the year, and 7.1 percent in the third quarter. This may be indicative of wage settlements becoming more sensitive to the persistently high unemployment rates.

Food price inflation remains a significant driver of inflation, and is sensitive to the continuing drought. While food price inflation is still expected to moderate from early 2017, the pace of decline is expected to be slower than previously forecast. This has led to an upward revision to the food price assumption in the forecast during the outer quarters in particular. The change is mainly due to the delayed impact of meat prices which are now expected to peak only in early 2018, as farmers rebuild their herds during 2017.

The MPC is of the view that a high degree of uncertainty surrounds the nature and timing of possible policy changes emanating from significant developments in the global economic environment. This elevated uncertainty creates a more challenging environment  especially for emerging markets as evidenced in the recent changed pattern of capital flows. Financial markets are thus likely to remain volatile for some time.

Since the previous meeting of the MPC the inflation forecast has remained largely unchanged. Whereas the risks to the inflation forecast were previously assessed to be more or less balanced, the Committee now assesses the risks to be moderately to the upside. This is mainly due to the possible impact of adverse global  developments on the exchange rate. The risk of domestically generated shocks to the exchange rate also remain. Nevertheless, despite its high degree of volatility, the rand has displayed relative resilience in the face of numerous shocks over the past year.

The MPC has accordingly decided to keep the repurchase rate unchanged at 7,0 per cent per annum. The decision was unanimous. The MPC remains concerned that the inflation trajectory is  uncomfortably close to the upper end of the target range.  Furthermore, the uncertain environment and moderately higher risks to the inflation outlook require continued vigilance. While the Committee retains the view that we may be close to the end of the hiking cycle, there may be a reassessment of this position should the upside risks transpire. 




Wednesday November 23 2016
South Africa Inflation Rate at 8-Month High of 6.4%
Statistic of South Africa l Chusnul Ch Manan | chusnul@tradingeconomics.com

Consumer prices in South Africa rose 6.4 percent year-on-year in October of 2016, following a 6.1 percent increase in September and above market expectations of a 6.3 percent gain. It was the highest inflation rate since February as cost of food and non-alcoholic beverages increased at a faster pace. Month-on-month, consumer prices increased by 0.5 percent following a 0.2 percent gain in the previous month.

Year-on-year, cost rose for housing and utilities (+5.4 percent, the same pace of the preceding month); food and non-alcoholic beverages (+11.7 percent from +11.3 percent), transport  (+4.3 percent from +3.5 percent), and miscellaneous goods and services (+7.5 percent from +7.2 percent). Additional upward pressure came form: alcoholic beverage and tobacco (+5.2 percent, the same pace as in September); household contents and services (+4.1 percent from 4.0 percent).
 
On a monthly basis, consumer prices increased 0.5 percent after a 0.2 percent rise in a month earlier. Prices of housing and utilities were unchanged from a 0.5 percent increase in the previous month and cost rose for food and non-alcoholic beverages (+0.9 percent from +0.2 percent) and transport (+1.1 percent from -0.1 percent).
 
The core inflation which excludes prices of food, non-alcoholic beverages, petrol and energy increased to 5.7 percent from 5.6 percent rise in September. 
 




Tuesday November 22 2016
South Africa Unemployment Rate Rises to 12-1/2-Year High
Statistics South Africa | Joana Taborda | joana.taborda@tradingeconomics.com

The jobless rate in South Africa went up to 27.1 percent in the third quarter of 2016 from 26.6 percent in the previous period, reaching the highest unemployment rate since 2004. Employment rose faster than unemployment while more people joined the labour force, bringing the participation rate up to its highest since 2002.

The number of unemployed persons increased by 239 thousand to 5873 thousand. 21.7 million people were employed, 288 thousand more than in the previous quarter. Job gains occurred in construction (+104 thousand to 1.49 million); trade (+61 thousand to 3.19 million); transport (+53 thousand to 915 thousand); agriculture (+56 thousand to 881 thousand) and utilities (+7 thousand to 118 thousand) while losses were recorded in manufacturing (-28 thousand to 1.68 million), private households (-15 thousand to 1.28 million) and mining (-9 thousand to 438 thousand)

More people joined the labour force (+527 thousand to 21.7 million), bringing the participation rate up to 59.1 percent. 15 million were detached from the labour force, 368 thousand less than in the previous quarter.

The expanded definition of unemployment, which includes people who have stopped looking for work, edged down to 36.3 percent from 36.4 percent.

A year earlier, the jobless rate was lower at 25.5 percent. 




Monday October 31 2016
South Africa Trade Balance Swings to Surplus in September
South African Revenue Service | Joana Ferreira | joana.ferreira@tradingeconomics.com

South Africa posted a trade surplus of ZAR 6.70 billion in September 2016 compared to an upwardly revised ZAR 8.88 billion deficit in August and beating market expectations of ZAR 1.1 billion gap. Exports rose by 10.1 percent, boosted by higher sales of precious metals and stones and chemical products; while imports decreased by 6.6 percent, as purchases fell mainly for precious metals and stones, mineral products and vegetable products.

Exports jumped by ZAR 9.05 billion, or 10.1 percent, to ZAR 98.92 billion in September 2016 from ZAR 89.86 billion in August, boosted by higher sales of precious metals and stones (+37 percent), chemical products (+15 percent), vehicles and transport equipment (+13 percent) and mineral products (+11 percent). By contrast, exports of vegetable products declined 13 percent. South African exports major destinations were the US (8.2 percent of total exports), China (8.1 percent), Germany (7.6 percent), Japan (4.8 percent) and Botswana (4.8 percent).

Imports went down by ZAR 6.53 billion, or 6.6 percent, to ZAR 92.22 billion from ZAR 98.74 billion the previous month, as purchases fell for precious metals and stones (-66 percent), mineral products (-30 percent), vegetable products (-20 percent) and vehicles and transport equipment (-4 percent). Meantime, imports rose for miscellaneous manufactured articles (+20 percent), base metals (+10 percent) and equipment components (+5 percent). The main sources of imports to the country were China (18.8 percent of total imports), Germany (12.4 percent), the US (6.3 percent), India (4.3 percent) and Saudi Arabia (4.2 percent).

Considering the first nine months of 2016, the trade deficit shrank to ZAR 9.95 billion compared to ZAR 37.19 billion the same period a year earlier, as exports went up 5.8 percent and imports grew at a slower 2.2 percent.

Excluding trade with neighboring Botswana, Lesotho, Namibia and Swaziland, the country posted a trade balance deficit of ZAR 3.05 billion in September. 


Wednesday October 19 2016
South Africa Inflation Rate Up to 6.1% in September
Statistics South Africa | Mojdeh Kazemi | mojdeh@tradingeconomics.com

Consumer prices in South Africa rose 6.1 percent year-on-year in September of 2016, following a 5.9 percent increase in August and below market expectations of 6.2 percent gain. It was the highest figure since June as cost of transport went up at a faster pace.

Year-on-year, cost rose for housing and utilities (+5.4 percent from +5.8 percent in August); food and non-alcoholic beverages (+11.3 percent, the same pace as in August). Also, prices rose at faster pace for transport  (+3.5 percent from +2 percent) and miscellaneous goods and services (+7.2 percent from +6.9 percent). Additional upward pressure came form: alcoholic beverage and tobacco (+5.2 percent, the same pace as in August); household contents and services (+4 percent from -0.9 percent).

On a monthly basis, consumer prices increased 0.2 percent after a 0.1 percent decline in a month earlier. Prices of housing and utilities went up by 0.5 percent and cost of food and non-alcoholic beverages rose 0.2 percent, mostly due to a 0.3 percent gain in cost of processed food and a 0.7 percent rise in bread and cereals. In contrast, transport prices edged down 0.1 percent, as petrol cost fell 1.5 percent.

The core index which excludes prices of food, non-alcoholic beverages, petrol and energy increased 5.6 percent year-on-year, following a 5.7 percent rise in August. Month-on-month, prices rose 0.3 from 0.2 percent in the previous month.



Friday September 30 2016
South Africa Trade Surplus Swings to Deficit in August
South African Revenue Service | Mojdeh Kazemi | mojdeh@tradingeconomics.com

South Africa posted a trade gap of ZAR 8.56 billion in August of 2016 from a downwardly revised shortfall of ZAR 5.04 billion in July, and way below market expectation of ZAR 3 billion surplus. Exports declined 5.5 percent, mostly due to a fall in sales precious metals and stones, while imports jumped by 9.2 percent due to higher purchases of precious metals and stones. Since the beginning of 2016, the trade balance swung to a ZAR 35.1 billion deficit compared to ZAR 7.4 billion surplus a year earlier.

Exports fell by ZAR 5.29 billion or 5.5 percent to ZAR 90.23 billion in August of 2016 from an downwardly revised ZAR 95.52 billion in the previous month, due to decline in sales of precious metals and stones (-30 percent); vehicles and transport equipment (-10 percent) and machinery and electronics (-6 percent). In contrast, exports increased for wood pulp and paper (66 percent); optical photographic product (36 percent). South Africa's major export destinations were China (7.7 percent of total exports), Germany (7.1 percent), the US (6 percent), Namibia (5.3 percent) and Botswana (5.2 percent).

Imports increased by ZAR 8.31 billion or 9.2 percent to ZAR 98.8 billion in August from ZAR 90.48 billion in the previous month, as purchases went up for precious metals and stones (205 percent); vegetable products (29 percent); mineral products (24 percent); chemical products (11 percent) and machinery and electronics (5 percent). The main sources of imports to the country were China (17.6 percent of total imports), Germany (12 percent), the US (6.4 percent), Saudi Arabia (4.8 percent) and India (4.2 percent).

Since the beginning of 2016, the trade balance swung to a ZAR 35.1 billion deficit compared to ZAR 7.4 billion surplus a year earlier. 

Excluding trade with neighboring Botswana, Lesotho, Namibia and Swaziland, the country posted a ZAR 18 billion shortfall. 


Thursday September 22 2016
South Africa Leaves Key Rate on Hold in September
South African Reserve Bank | Mojdeh Kazemi | mojdeh@tradingeconomics.com

The South African Reserve Bank kept its benchmark repo rate unchanged at 7 percent in September of 2016 as widely expected. Policymakers said the inflation outlook has improved as earlier return to target range is seen, although growth remains subdued due to weak domestic fixed investment and low levels of business and consumer confidence. As a result, the improvement seen in the second quarter is unlikely to be sustained.

Excerpts from the statement issued by Lesetja Kganyago:

The domestic economy remains weak despite the positive growth surprise in the second quarter of 2016, when an annualised growth rate of 3,3 per cent was recorded. This was driven by a rebound in the primary sector, and a surge in real exports. Mainly as a result of the higher starting point, the Bank’s forecast for economic growth for 2016 has been revised upward from zero per cent to 0,4 percent. The forecasts for the next two years have been increased marginally by 0,1 percentage points, to 1,2 per cent and 1,6 per cent respectively. Estimates of potential output growth are unchanged, implying a persistence of below-potential growth. The trend in the Bank’s composite leading indicator of economic activity remains indicative of subdued growth.

The Monetary Policy Committee has noted improvements in the expected inflation trajectory during the course of the year. Apart from the tighter stance of monetary policy, this has also been driven by lower starting points, as inflation surprised at times on the downside, and changed assumptions underlying the forecast. The expected peak in headline inflation is notably lower, and an earlier return to within the target range is also expected. Most of the changes have been for the current and coming year, whereas the changes in the forecast for 2018 have been marginal. Changes to the core inflation forecast have been less pronounced, but it is no longer expected to breach the upper end of the target range. Despite these improvements, the longer-term inflation trajectory remains uncomfortably close to the upper end of the target range, with high wage settlement rates and inflation expectations contributing to this persistence.

The MPC assesses the risks to the inflation forecast to be more or less balanced at this stage. The current level of the rand is stronger than that implicit in the forecast, and, in conjunction with continued low levels of pass-through from the rand to inflation, the risks are assessed to have moderated somewhat. However, some of the positive factors impacting on the rand may be temporary, and the rand remains vulnerable to both domestic and external shocks. The other major risk to the inflation outlook relates to food prices. The forecast still expects food prices to peak in the final quarter of this year. The future trajectory of these prices will be highly dependent on the normalisation of rainfall in the coming months. Favourable weather patterns could see food price inflation falling faster than that implicit in the forecast. 

The committee is aware that a number of the favourable factors that have contributed to the improved outlook can change very quickly resulting in a reassessment of this view. The bar for monetary accommodation, by contrast, remains high, as the MPC would need to see a more significant and sustained decline of the inflation trajectory to within the inflation target range.