WITH very few data releases on the economic
calendar this week, attention will fall on domestic mining and
manufacturing production on Thursday, as well as global events.
Although
investors are more interested in what Finance Minister Pravin Gordhan
will say in his budget speech on February 24, they will also pay
attention to President Jacob Zuma’s state of the nation address on
Thursday.
Mr Zuma is due to meet business leaders on Tuesday ahead of his address. The meeting follows the discussions Mr Gordhan hosted for 60 CEOs a week ago.
On Wednesday, Stats SA will release tourism and migration data. These would be monitored closely for signs of a revival in visitor arrivals, given the recent currency blow-out and the lifting of some tourist travel restrictions, First National Bank economists Alex Smith and Mamello Matikinca said.
"Anecdotal evidence suggests that the number could positively surprise, providing some much-needed upbeat news in what is an otherwise uninspiring week," the economists said.
Mining and manufacturing data from Statistics SA are expected to show that output in the sectors contracted again in December compared with a year ago, after declines in November.
The sectors continue to face significant headwinds due to rising input costs, weak demand and low commodity prices.
Mining production decreased 0.8% year-on-year in November, and manufacturing production fell 1% over the same period.
"On a quarterly basis, both sectors are at risk of recording a contraction in production, suggesting that the sectors will once again detract from GDP (gross domestic product)," Investec economist Kamilla Kaplan said.
Mining and manufacturing together account for 20% of the country’s GDP.
Weak impetus for capital investment, rising operating costs, government policy uncertainty and a decline in international competitiveness were among the other factors weighing on the two sectors.
The Barclays manufacturing purchasing managers’ index (PMI) backs up forecasts supporting a contraction of manufacturing production. The index leads actual manufacturing output data and is an indicator of activity in the sector
The PMI improved slightly in December, but remained below the critical 50-mark level, at 45.5. A level below 50 indicates contracting manufacturing activity.
Globally, the data that will have an effect on domestic markets are Chinese trade data, US initial jobless claims and retail sales, and fourth-quarter economic growth in the eurozone.
In particular, investors will be looking out for how Chinese imports performed, as this is an important indicator of demand in that country.
Chinese economic growth and demand is slowing down, which does not bode well for domestic mineral exports.
The rand may weaken if data show that Chinese imports have fallen. The domestic currency may also weaken if US unemployment claims fall, as this would imply an improving labour environment — which would, in turn, support the dollar.
An improvement in eurozone GDP data could lift the rand. Given that the eurozone is one of the main export markets for domestically manufactured goods, a rise in that region’s economic growth would bode well for higher demand.
Mr Zuma is due to meet business leaders on Tuesday ahead of his address. The meeting follows the discussions Mr Gordhan hosted for 60 CEOs a week ago.
On Wednesday, Stats SA will release tourism and migration data. These would be monitored closely for signs of a revival in visitor arrivals, given the recent currency blow-out and the lifting of some tourist travel restrictions, First National Bank economists Alex Smith and Mamello Matikinca said.
"Anecdotal evidence suggests that the number could positively surprise, providing some much-needed upbeat news in what is an otherwise uninspiring week," the economists said.
Mining and manufacturing data from Statistics SA are expected to show that output in the sectors contracted again in December compared with a year ago, after declines in November.
The sectors continue to face significant headwinds due to rising input costs, weak demand and low commodity prices.
Mining production decreased 0.8% year-on-year in November, and manufacturing production fell 1% over the same period.
"On a quarterly basis, both sectors are at risk of recording a contraction in production, suggesting that the sectors will once again detract from GDP (gross domestic product)," Investec economist Kamilla Kaplan said.
Mining and manufacturing together account for 20% of the country’s GDP.
Weak impetus for capital investment, rising operating costs, government policy uncertainty and a decline in international competitiveness were among the other factors weighing on the two sectors.
The Barclays manufacturing purchasing managers’ index (PMI) backs up forecasts supporting a contraction of manufacturing production. The index leads actual manufacturing output data and is an indicator of activity in the sector
The PMI improved slightly in December, but remained below the critical 50-mark level, at 45.5. A level below 50 indicates contracting manufacturing activity.
Globally, the data that will have an effect on domestic markets are Chinese trade data, US initial jobless claims and retail sales, and fourth-quarter economic growth in the eurozone.
In particular, investors will be looking out for how Chinese imports performed, as this is an important indicator of demand in that country.
Chinese economic growth and demand is slowing down, which does not bode well for domestic mineral exports.
The rand may weaken if data show that Chinese imports have fallen. The domestic currency may also weaken if US unemployment claims fall, as this would imply an improving labour environment — which would, in turn, support the dollar.
An improvement in eurozone GDP data could lift the rand. Given that the eurozone is one of the main export markets for domestically manufactured goods, a rise in that region’s economic growth would bode well for higher demand.
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