Mail and Guardian
Economic week ahead: Auto, mining sector effects on SA growth
25 Nov 2013 06:15 Matt Quigley
From Stats SA’s GDP data release, which might address auto and mining sector issues, to housing market reports in the US, here’s your economic guide.
Tuesday’s gross domestic product (GDP) data from Statistics South Africa (Stats SA) is likely to show that strikes in the auto and mining sectors took their toll on growth in the third quarter. Elsewhere on the continent, a series of central bank decisions and inflation snapshots will keep markets on their toes.
Overseas, attention will focus on housing market reports in the US, inflation and unemployment data in Europe and a slew of reports from Japan. Here is your guide.
Africa Three central banks in Africa will announce monetary policy decisions this week. Ghana’s central bank will announce its latest rates decision on Wednesday. Mauritius will follow on Friday. Zambia officials are also expected to make an announcement over the coming days.
The Bank of Ghana last raised its benchmark policy rate by 100-basis points to 16% in May. With inflation pressures on the rise, officials may choose to hike rates again.
Consumer inflation in Ghana rose sharply last month. The country’s consumer price index (CPI) rose 13.1% from a year earlier in October, up from an 11.9% year on year rise in the prior month. On a monthly basis, prices rose by 2.3%, on average, in October after falling in both September and August.
A sharp increase in utility tariffs came into effect in Ghana last month. These price hikes, coupled with continued depreciation in the value of the local currency – the cedi – against the dollar, explain most of the jump in CPI. Non-food price inflation is expected to remain elevated for quite some time.
The Bank of Mauritius’s monetary policy committee is likely to leave the bank’s benchmark rate on hold at 4.65% at this week’s meeting. Price inflation has been on an upward trend since August, but has increased by a slower rate than previously expected. And a temporary rise in reserve requirements for banks on their rupee deposits in early October from 7% to 8% addressed excess liquidity in the banking system.
Beyond these central bank meetings, economists will be on the lookout for CPI readings from Zambia, Kenya and Uganda this week along with GDP figures from South Africa.
Tuesday’s data from Stats SA is likely to show that Africa’s largest economy grew by around 1% in the third quarter, down from 3% quarterly growth during the April to June period.
United States US markets will be closed on Thursday and the New York Stock Exchange will shut down early on Friday in observance of the country’s Thanksgiving holiday. Trading volumes are expected to be low in the shortened week ahead and the country’s economic calendar is light.
Data due on Monday is expected to show that pending home sales rose in October. Consensus is that the National Association of Realtors’s pending home sales index rose 1.1% in October after falling a sharp 5.6% in September.
On Tuesday, housing starts data is likely to show that builders broke ground on 903 000 units in September and 905 000 units in October, up from 891 000 units in August. A separate release covering housing prices in 20-cities – the S&P Case Shiller home price index – is likely to show that housing prices rose by 0.9%, on a seasonally adjusted basis, from August to September.
On Wednesday, attention will shift to durable goods orders, jobless claims, consumer sentiment and the Chicago manufacturing purchasing managers’ index (PMI).
Durable goods orders likely fell 2% last month after rising 3.7% in September. Weekly jobless claims probably rose to 330 000 in the week ended November 23 from 323 000 in the holiday-shortened week ended November 16. The University of Michigan’s consumer sentiment index is expected to edge up to 73.3 this month from 72 last month. And the Institute for Supply Management’s headline Chicago PMI is expected to fall to 60.5 from 65.9. Any figure above the 50-mark signals continued expansion.
Europe Tuesday’s inflation report hearing in the UK is the first economic event of note in Europe this week. Parliament’s treasury select committee will quiz Bank of England chief Mark Carney on the central bank’s new forecasts for economic growth, inflation, unemployment and the timing of the bank’s pullback on stimulus.
On Wednesday, the UK will release a second estimate of third quarter economic growth. Consensus is that Europe’s third largest economy grew 0.8%, quarter on quarter, and 1.3% from a year earlier during the three months ended in September.
The improving economic picture has led to increased speculation that the Bank of England will be forced to raise rates and pull back on stimulus earlier than policymakers have indicated. Markets will be on the lookout for any hints at a confirmation of their suspicions on Tuesday.
On Friday, attention will shift to inflation and unemployment data for the eurozone. Inflation fell to 0.7% in October, almost its lowest level in four-years. This week’s data is expected to show that inflation edged up to just 0.8%, well below the European Central Bank’s 2% target. Markets suspect that unemployment held steady at 12.2%.
With interest rates close to zero, another round of reports of high unemployment and extremely low inflation is likely to set off a fresh round of speculation that increasingly unconventional policy solutions are on their way from the European Central Bank.
German retail sales figures are also due on Friday. Markets are looking for 0.5% growth, an improvement on last month’s 0.6% decline.
Asia Economists and investors will be on the lookout for two key pieces of economic data from the Philippines this week. Officials will release September trade data on Tuesday and third quarter GDP data on Thursday.
Analysts at 4CAST expect Tuesday’s trade data to show that the country recorded a $305-million deficit in September, down from $961-million in August. Thursday’s GDP data is likely to show that growth slowed from 7.5% in the second quarter to around 7% in the three months ended in September.
The Philippines has been one of Asia’s fastest growing economies this year, but was hard hit by Typhoon Haiyan earlier this month. Preliminary estimates put the costs of damage from the massive storm – which killed more than 5 000 people and displaced around three-million – at up to $14-billion.
Elsewhere in the region, a series of releases of will keep Japan – the world’s third largest economy – forefront in investors’ minds at the end of the week.
October’s retail sales data – scheduled for release on Thursday – is forecast to show a 1.8% rise from a year earlier, down from 3% growth in September.
On Friday, CPI data is likely to show that national core CPI – which excludes perishables – rose 0.9% from a year earlier in October, a fifth consecutive year on year rise, and the largest gain since November 2008.
Separate government data is likely to show that the country’s unemployment rate remained unchanged at 4% in September, that household spending rose 1.4% from a year earlier in October and that industrial production rose 2% from September to October.
Matt Quigley writes the weekly economic preview for the Mail & Guardian.
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