ECONOMIC WEEK AHEAD: New-vehicle sales are likely to plunge again

Nedbank expects a jam-packed week, with Tuesday being the busiest as numbers on March’s money supply, private sector credit extension, international tourism, fiscal and trade balances are due.

As local markets will be closed on Wednesday for the Workers Day holiday, the normal first of the month releases have been moved to Thursday.

The number of gigawatt hours lost due to load-shedding in April will be announced on Wednesday. As Eskom was able to have 30 consecutive days free of load-shedding by April 26, it should be zero.

New-vehicle sales for April will be out on Thursday as well as the BER/Absa manufacturing purchasing managers’ index (PMI) and the February utilisation of production capacity by large manufacturing enterprises and March electricity generated and available for distribution.

The index measuring expected business conditions jumped to 62.1 in March (from 59.5). “This is the most upbeat respondents have been about business conditions going forward since the start of 2023,” said Investec’s Lara Hodes.

Global manufacturing conditions have improved too.

On Friday, the provisional government financing data for April will be published. Nedbank expects annual growth in private sector credit extension to have remained subdued in March, at 3.4% from 3.3%, off a high base and reflecting the generally weak economic environment.

The annual growth in loans and advances (excluding investment and bills) is likely to edge up slightly to 3.5% from 3.4% as higher interest rates, weaker household finances and fading consumer confidence continued to undermine household spending and credit demand. Similarly, weak economic activity and business confidence are likely to have weighed on corporate credit demand.

Nedbank expects the foreign trade balance will narrow to R10.8bn in March from R14bn in February. Trading Economics forecast a wider surplus at R18bn. In Nedbank’s view export growth is likely to have been contained by weak global demand and lingering local logistical challenges, while import growth will be limited by subdued demand for consumer goods as household finances remain under pressure.

Vehicles sold

Imports are likely to have increased slightly faster than exports over the month, resulting in a smaller surplus. This seems to be confirmed by the Transnet container data showing a 11.4% monthly rise in full containers imported, while full containers exported only grew 8.4%.

The volume of new vehicles sold in April is likely to show an annual contraction for the ninth consecutive month. Nedbank expects the number to fall 10.4% after a 11.8% decline in March as higher interest rates and weaker household finances continue to dampen demand for credit-financed items.

Trading Economics forecast the fiscal deficit will narrow to R30bn in March from R46.1bn in March 2023. The forecast seems to be based on the better-than-expected revenue collection by the SA Revenue Service (Sars). It collected a net R1.74-trillion, almost R10bn more than the revised estimate and R54bn more than last year.

Trading Economics expects a slight improvement in the Absa PMI to 49.5 in April from 49.2, probably due to the absence of load-shedding in April.

The March electricity data should also confirm the improvement in electricity availability as the number of gigawatt hours lost to load-shedding eased to 939 in March from 1,987 in February. Electricity consumption rose 5% year on year in February after a 1.6% year-on-year gain in January.

Provisional government financing data for April should disclose how many foreign loans the government received, as these have generally sailed in under the radar. The Treasury received a foreign loan of C$120m (R1.679bn) from the government of Canada under the general budget support for SA including the just energy transition programme.