In this edition of Business Day Spotlight, we highlight some of the data released this week and what it can tell us about the health of SA’s economy

Our host Mudiwa Gavaza is joined by Sanisha Packirisamy, economist at Momentum Investments.

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The conversation begins by unpacking economic indicators released this week, starting with Absa’s purchasing managers’ index (PMI), which edged lower to 51.2 points in July, from 53.9 in June.

With manufacturing accounting for about 13% of SA’s economy, Packirisamy says this is a good indicator of how the sector is likely to fare for the foreseeable future. The data also suggests that the industry may shed more jobs, she says, explaining that looking more closely at the components of the PMI gives better insights into state of the sector.

Business Day Spotlight host Mudiwa Gavaza. Picture: DOROTHY KGOSI.
Business Day Spotlight host Mudiwa Gavaza. Picture: DOROTHY KGOSI.

Turning to vehicles sales, the National Association of Automobile Manufacturers of SA reported this week that 32,396 vehicles were sold in July, markedly down from 46,042 in July 2019. But July 2020 figures are still higher than those of June, when vehicle sales resumed officially.

Packirisamy says the motor industry is another important sector that brings in good revenues for the country in export earnings. She says we’re likely to see depressed demand — at least in the domestic market — for the rest of the year, given the pressure facing consumers.

Attention then shifts to the recently approved loan from the International Monetary Fund (IMF). Last week, SA received its first ever IMF loan last week, a $4.3bn (about R70bn) provision under the rapid financing instrument, an IMF tool to assist countries in the event of catastrophe.

Packirisamy explains what this means for the country’s finances and how the loan could be used as a tool to nudge policymakers forward on implementing the structural reforms the government has spoken about for so long.

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 Business Day Spotlight is a MultimediaLIVE production.

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