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Picture: 123RF/ALLAN SWART
Picture: 123RF/ALLAN SWART

The release of the Absa manufacturing purchasing managers’ index (PMI) for June on Monday and S&P Global’s private sector PMI on Wednesday will provide some clues as to the state of the economy in the second quarter.

The PMIs showed an improvement in activity in April, but the Bureau for Economic Research (BER) at Stellenbosch University said the May Absa PMI was poor, with uncertainty ahead of the election causing a “wait-and-see” hold in demand.

The BER said it was important to highlight that PMIs are not designed to be sentiment indicators but a better PMI reading would suggest that underlying sentiment is more upbeat amid improving business conditions (and vice versa).

While the election outcome was known through June, there was still no clarity on the composition of the government that could have spurred a release of pent-up demand. However, the peaceful nature of the election and the continued absence of load-shedding could be positive with 95 days of no load-shedding on June 30.


The BER consumer inflation expectation survey for the second quarter will be released on Friday. The survey will provide more insight into the success, or otherwise, in achieving the Reserve Bank’s goal to have inflation expectations of price setters, in particular, drift lower to the 4.5% inflation mark.

In the first quarter of 2024, the average inflation expectations of analysts, business people and trade union officials eased by 0.3 percentage points to 5.4% for 2024. Among the three social groups, only analysts expect that inflation will subside to below 5% and stabilise at 4.7% in 2025 and 2026.

On Monday the new-vehicle sales data should show another large year-on-year drop in June with the Nedbank Group Economic Unit expecting sales to contract by 19.3% year on year in June after a 14.2% year-on-year decline in May. The weakness reflects high base effects and the continued effect of higher interest rates and weaker household finances on consumer spending.

The electricity data for May, to be released on Thursday, should see an improvement on May 2023 as there were no gigawatt-hours (GWh) lost to load-shedding in May 2024 compared with 3,429 GWh lost in May 2023, which was the peak month in terms of load-shedding. Electricity consumption jumped 6.2% year on year in April and another large increase should be expected in May.

The Reserve Bank’s gross reserves data will be released on Friday. Reserves are projected by Nedbank to have decreased slightly to $61.99bn in June from $62.09bn in May and $61.8bn in April, pulled down by a decline in gold reserves and no growth in foreign exchange reserves.

Gold reserves fell 1.5% over the month, reflecting valuation adjustments following a decrease in the market gold price. The international liquidity position will broadly remain unchanged at about $58.3bn. The rand value of reserves is likely to increase marginally as the local unit appreciated (up by 2.1% month on month) against the dollar. The value of gross reserves will remain at about seven months' import coverage.

On the international front, the focus will be on the US non-farm payrolls, which are expected have added 180,000 jobs in June, cooling from 272,000 in May. Final PMI numbers are due for major countries, and the sentiment is that they will be in line with last week’s preliminary data. Other releases include preliminary inflation numbers from Germany and France, and the UK house price index data.

The UK election on Thursday is unlikely to cause market jitters as it is widely expected that the governing Conservative Party will be replaced by the Labour Party.

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