JOHANNESBURG - Although the first quarter’s Quarterly Labour Force Survey (QLFS) on Tuesday will dominate the data release calendar next week, other releases such as those for retail sales and building plans will add colour as to how the economy performed in the first quarter.
The fourth quarter 2017 QLFS showed an increase in the unemployment rate to 26.7% in the fourth quarter 2017 from 26.5% in the fourth quarter 2016. Given the +6% rise in the first quarter 2018 Manpower survey, we could see some easing in the unemployment rate, but generally speaking, labour dynamics are a lagging indicator. If more production is required, then labour first of all works more overtime before more workers are hired. In the fourth quarter the number of formal sector jobs increased by 88,000 year-on-year (y/y), while the population aged 15 to 64 years old rose by 621,000 y/y.
The overall (including informal, domestic servants and farming workers) labour absorption rate dropped to 43.1% in the fourth quarter 2017 from 43.6% in the fourth quarter 2016.
Economists will hoping for an improvement in the seasonally adjusted South African Chamber of Commerce and Industry (SACCI) Trade Activity Index (TAI) in April. The TAI fell to 40 in March from 42 in February, 51 in January, 48 in December and 41 in November. The sales volumes index rose to 46 in March after being steady at 43 in February and January, while the new orders index fell to 35 in March from 41 in February after being steady at 40 in January and December. The input price index jumped to 72 in March from 61 in February.
The sales price also jumped to 59 in March from 48 in February. The February sales price index was the first time since April 2009 (after the global recession of 2008/09) that according to respondents, sales prices were declining. The employment sub-index eased to 42 in March after being steady at 46 in February and January.
Retail sales on Wednesday should show a strong y/y increase as Good Friday shifted to March this year from April last year. In addition, the school holidays started in March compared with April last year. Real retail trade sales rose by 4.9% y/y in February after a revised 3.3% (3.1%) y/y increase in January and a 2.9% gain in 2017. The February increase was above the consensus forecast of a 2.8% y/y rise. Sales advanced faster for furniture & household equipment (14.2% vs 14.1%), general dealers (3.9% vs 1.2%); textiles, clothing, footwear & leather goods (7.1% vs 6.7%); all other retailers (6.1% vs 5.0%) and food, beverages & tobacco (4.4% vs 0.5%).
Real wholesale trade sales rose by 0.7% y/y in February after a revised 2.5% (1.9%) fall y/y in January and a 3.0% drop in 2017. In March there should be a continued rise in the y/y rate.
Nominal motor trade sales rose by 3.5% y/y in February after a revised 6.2% (6.0%) y/y increase in January and a 3.8% gain in 2017.
Economists are expecting a better performance in March as the first two months of the year saw a y/y decline in the number of new vehicles sold before a return to positive y/y growth in March.
The real value of building plans passed rose by 4.3% y/y in the first two months after a 7.8% y/y drop in 2017. The real value of building plans completed was flat y/y in the first two months after rising by 12.9% y/y in 2017.