Economic activity expected to have lifted 0.2%-0.4% after 0.1% contraction in first quarter
Economic activity expected to have lifted 0.2%-0.4% after 0.1% contraction in first quarter
After contracting in the first quarter this year economic activity is widely expected to have rebounded somewhat in the second quarter.
Stats SA will release GDP data for the second quarter on Tuesday. On a quarter-on-quarter basis, GDP contracted by 0.1% in the first quarter. Economists expect growth to have lifted by 0.2%-0.4% in the second quarter.
Lisette IJssel de Schepper, chief economist at the Bureau for Economic Research (BER) said despite the sustained absence of load-shedding an expansion of just 0.4% quarter on quarter was expected.
“This is largely based on the available high-frequency data, and slightly below what we expected at the beginning of the quarter. Logistical challenges remained a drag, while the BER’s business surveys suggest that much of the demand, and activity was held back amid uncertainty about the election outcome and composition of the new government,” she said.
FNB has pencilled in quarter-on-quarter growth of 0.2%-0.4%, supported by increased activity in the manufacturing, trade and utilities sectors.
“Though notoriously volatile, the agricultural sector likely contributed positively to economic growth, driven by increased activity in horticulture and, to some extent, field crops,” FNB chief economist Mamello Matikinca-Ngwenya said. “The high-interest rate environment continues to support the financial services sector, albeit to a lesser extent due to significant constraints on consumers,
FNB expected overall economic growth of 0.4% for the first half of 2024 compared with the corresponding period last year and 0.3% year-on-year growth for the second quarter.
The SA Reserve Bank’s latest estimate projected 0.6% growth for the second quarter and GDP growth of 1.1% for the year.
New vehicle sales data for August will be released on Monday. In July, new vehicle sales (volumes) increased by 1.5% year on year, breaking an 11-month streak of declines. This outcome was driven by passenger vehicle sales, which rose by 6.8%, while total new commercial vehicle sales declined by 8%.
“It is still too early to determine if the July increase signals the start of an upward trend in vehicle sales, especially given the significant pressures faced by households,” Matikinca-Ngwenya said. “We believe this increase was partially due to base effects related to the severe load-shedding experienced in July 2023, but also supported by increased sales to the rental industry, which boosted performance in the reference month.”
Also on Monday, the Absa purchasing managers’ index (PMI) for August will be released. PMI remained subdued in May and June, but rebounded from 45.7 index points in June to 52.4 points in July signalling a rebound in domestic and external demand.
The RMB/BER business confidence index for quarter three will be published on Wednesday. IJssel de Schepper said the index should provide some sense of how sentiment and business conditions had changed since the election and the formation of the government of national unity.
Other economic releases this week include the current account data for quarter two, which the Reserve Bank will release on Thursday. Stats SA will release data on electricity generated and available for distribution for July, and on Friday, the Bank will release data on SA’s foreign exchange reserves for August.
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