ECONOMIC WEEK AHEAD: Mining expected to weigh down growth
Mining and manufacturing figures expected on Thursday should provide some indication of how the economy performed in the first quarter of 2018.
Based on data so far for January and February, both sectors are expected to weigh down economic growth for the first quarter, based on weak performances. Unless the two sectors experience a surprise jump in growth in March, the data on Thursday will paint a more realistic picture of how much these sectors will take from economic growth.
FNB chief economist Mamello Matikinca said a resolution of the uncertainties surrounding the Mining Charter, which is expected to be finalised at the end of May, would be an additional boost for the sector, although the industry remains very vulnerable to changing demand patterns.
Of concern, she added, was the US-imposed tariff hike on Chinese steel imports — as part of President Donald Trump’s trade war — which has the potential to blunt demand for domestic iron ore, which makes up 15% of mining output.
Manufacturing is also expected to show a weak performance as the Absa purchasing managers’ index (PMI) fell sharply in March.
The index, which gauges manufacturing activity, fell to 46.9 in March from 50.8 in February, its lowest reading since December.
"The big slump in the Absa PMI number in March raises the possibility of disappointing figures [this] week. Overall, however, as domestic household consumption begins to gain momentum, we expect the manufacturing numbers to begin showing a modest improvement through the year," said Matikinca.
Trading Economics expects mining to moderate to 1.97% year on year from 3.1% in February, while manufacturing is expected to accelerate to 1.91% from 0.6%. Investec expects mining to have contracted to about -4% and manufacturing to lift to 0.3%.
The South African Chamber of Commerce and Industry business confidence index is expected on Wednesday.
While business confidence has hung on to its positive momentum, the index moderated slightly in March. It declined marginally, by 1.3 index points, from 98.9 in February to 97.6 in March.