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Picture: 123RF/MARK AGNOR
Picture: 123RF/MARK AGNOR

The fact that load-shedding has been suspended for more than 100 days in a row provides grounds for optimism that the May manufacturing and mining production data due on Thursday will show continued year-on-year increases.

The last time SA experienced such an extended suspension of load-shedding was the period between September 8 2020 and December 11 2020.

Nedbank expects mining production to increase 1% year on year in May after a 0.7% gain in April and a 4.8% drop in March, while manufacturing production should increase by 2.4% after a 5.3% jump in April and a 6.5% decline in March, when load-shedding was still a constraint.

Trading Economics is more optimistic and forecasts a 1.7% year-on-year rise for mining production and a 3.2% increase for manufacturing.

Growth will also be supported by base effects and an improvement in general operating conditions compared with last year. May 2023 was the worst month for load-shedding.

The Bureau for Economic Research (BER) at Stellenbosch University said the mining and manufacturing production data for May will give us a better sense of the effect a lack of load-shedding had in the second quarter on the domestic economy — at least from a production perspective.

Looking further ahead, the strike at Ford’s plant in Silverton could be a setback for factory output at the start of the third quarter. After an interdict was granted, workers are expected back at work on Monday.

The local manufacturing sector had some good news with ArcelorMittal SA (Amsa) announcing that its long steel business, which had been under review for closure, will remain in production. Its remark that there was some progress on Transnet’s operations is positive, and further improvements could benefit the whole economy.

Transnet should be releasing its ports operations data later in the week, which should show how much of an improvement the new management team has achieved. In May, bulk export volumes surged by 19.1% year on year after a 15.5% rise in April, and another double-digit increase should be on the cards for June.

The Ctrack transport and freight index for May is also due in the week and will give further insight into the logistics sector. Transport, storage and communications was the best-performing sector in 2023 with a 4.3% gain. The index rose by a monthly 2.8% in April. Except for declines in two subsectors — sea freight, and storage and warehousing — activity in all other subsectors advanced on a monthly basis, led by notable increases in air and road freight.

A combination of poor weather, equipment breakdowns and a system failure dominated port operations in April. Given that these declines were attributable to adverse weather conditions, activity should have rebounded, so there should be another monthly improvement in May.

On the international front, the BER said US consumer and producer inflation prints will play into interest rate expectations, as will the preliminary reading of the July Michigan consumer sentiment survey, which includes inflation expectations data. Beyond data and the implications for monetary policy, the US news cycle will likely continue to focus on the presidential election race.

From a Brics point of view, Indian Prime Minister Narendra Modi’s trip to Russia will grab headlines, but it should be viewed through the lens of India seeking to reap economic gains from its non-aligned status.

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