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Picture: SUPPLIED
Picture: SUPPLIED

The Bureau for Economic Research (BER) at Stellenbosch University expects an uptick in the first-quarter unemployment rate if school-leavers and other labour market entrants at the start of the year did not find employment.

The data in the Quarterly Labour Force Survey will be released on Tuesday. Trading Economics forecasts a marginal rise in unemployment to 32.3% from the fourth quarter’s 32.1%.

Also due on Tuesday is data on mining production. BER economist Tracey-Lee Solomon said that in February mining production surprised on the upside, but a repeat of that month’s 9.9% year-on-year increase was unlikely. Some monthly growth was needed to push quarterly momentum into positive terrain and for the sector to make a positive contribution to GDP.

Nedbank expects continued weakness in mining production because global demand and commodity prices remain broadly suppressed, and structural constraints persist despite the year-on-year improvement in electricity production. Nedbank forecasts an increase in mining production of about 3.6%, driven by the 59% year-on-year decline in load-shedding in March. Trading Economics is more pessimistic and expects a 3% year-on-year contraction.

Internal trade data will provide further input into the first quarter GDP picture, which is due on June 4. The BER said that retail was so far on track for a quarterly loss, but the wholesale and motor trades (data to be released on Thursday) were looking better. Retail trade sales data will be released on Wednesday.

On the global front, the US consumer inflation print for April will receive attention. The BER repeated the message that any upward or downward surprise to the consensus view could lead to some volatility in financial markets as the market readjusted its interest rate expectations. This was so especially if inflation accelerated for a third consecutive month — the view was for inflation to be unchanged at 3.5% year on year and for the pace of monthly price gains to slow.

In addition, the US will also report producer inflation statistics for April. Trading Economics forecasts a rise to 2.2% year on year from 2.1% year on year in March.

The New York Federal Reserve will publish its household debt and credit report that will show the pressure that US consumers are facing from higher interest rates. Delinquency rates have been trending higher for younger borrowers in particular.

Other US releases include data on retail sales, industrial production, import and export prices, as well as housing starts and building permits.

Investors will also pay close attention to statements from various US Federal Reserve officials for clues on when US interest rate cuts may begin, particularly chair Jerome Powell’s appearance at the AGM of the Foreign Bankers’ Association in Amsterdam on Tuesday.

German and French inflation data on Tuesday and Wednesday, respectively, will be watched for evidence of further easing before the European Central Bank’s interest rate meeting on June 6. Japanese first-quarter GDP data on Thursday will show whether the high corporate salary increases have boosted domestic consumption.

In Germany, the ZEW indicator of economic sentiment is expected to rise for the 10th consecutive month in May, reaching its highest level since February 2022. Industrial production in the eurozone is expected to decrease after a rebound in February. In Russia, inflation is set to increase to 7.8% year on year in April, the highest in 14 months, from 7.7% year on year in March.

An important week of economic releases in China will be headlined by industrial production, retail sales, the unemployment rate, and housing prices for April. These April releases follow a batch of mixed signals from the Chinese economy in the first quarter that grew 5.3% year on year in the quarter after a 5.2% year-on-year gain in the fourth quarter.

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