Picture: David Ritchie
Picture: David Ritchie

CPI will be main data point in the week ahead

By Helmo Preuss Time of article published Jul 14, 2018

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JOHANNESBURG -  There will be a flurry of data releases next week, but the main focus of economists will be the June consumer price index (CPI) on Wednesday. 

There will be a flurry of data releases on Wednesday and Thursday that relate to internal trade and building plans and steel data is expected on Friday.

The first data release is the seasonally adjusted South African Chamber of Commerce and Industry (SACCI) Trade Activity Index (TAI) for June on Tuesday. The TAI fell to 38 in May from 39 in April and was last above the neutral 50 level in January. The sales volumes index rose to 36 in May from 35 in April and economists are hoping it moves above 40 in June. 

The new orders index jumped to 45 in May from 34 in April and should move above 50 in June. The input price index eased to 65 in May after being steady at 72 in April and March, but is likely to increase again in June due to the weakness in the rand.  The sales price index slipped to 58 in May from 61 in April and 48 in February, 50 in January and 51 in December. 

The employment sub-index rose to 43 in April from 42 in March after being steady at 46 in February and January. 
The June consumer inflation data is the third release that will have the higher Value Added Tax rate, but there will also be increased fuel levies that kicked in during April. So far this year consumer inflation has come in below the consensus forecast so economists are modifying their forecasts lower and expecting June inflation to stay near the 4.4% y/y reading for May. 

Real retail trade sales rose by 4.1% y/y in the first quarter, but then slowed to a 0.5% y/y gain in April. Part of the reason for this slowdown was due to the shift of Good Friday to March this year from April last year. In addition, the VAT rate increase on 1 April brought some sales forward into March from April. This effect was most marked in the food, beverages and tobacco in specialised stores sector, where real retail sales fell by 5.5% y/y in April after rising by 4.0% y/y in March and a 0.5% y/y gain in January. Economists are expecting real retail sales to rise by 2% y/y in May.   

Real wholesale trade sales fell by 0,3% y/y in the first quarter and declined by 2.6% y/y in April. Economists are expecting another y/y decline in May. Real wholesale trade has been subdued the past three years due to the drought and low oil prices. The Easter effect was most marked in wholesalers of precious stones and jewellery, which saw a 83.5 % y/y surge in nominal terms in March followed by a 43.4% y/y slump in April.

Nominal motor trade sales rose by 5.7% y/y in April after a 4.8% y/y increase in the first quarter. In April the rise was due to a 10.5% y/y increase in fuel sales, as well as 9.4% y/y rise in used vehicle sales, but new vehicle sales fell by 0.3% y/y. The recovery in new vehicle sales in May should mean that total motor trade sales should rise around 8% y/y.  

The real value of building plans passed rose by 6.0% y/y in the first four months, but the real value of buildings completed fell by 14.6% y/y over the same period. Building is a lagging indicator, so the rise in building plans passed is a delayed response to the new administration, while the fall in building plans completed reflects the legacy of the Zuma administration.  

South African steel production grew by 2.6% y/y in May to an estimated 568,000 tonnes according to the World Steel Association after a sequence of three consecutive months of y/y declines. 

This contrasts with a 6.6% y/y gain in global steel production to a record 154.9 million tonnes (Mt), led as usual by China, which produces more than half global steel.  Economists expect June to show another y/y increase for South African steel production. 


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