Economic week ahead: SA looks out for mining reports

Matt Quigley

As US budget negotiations keep markets on their toes, South Africa is set to eye October's mining and manufacturing reports and retail trade figures.

SA's latest inflation, mining, manufacturing and retail sales figures will give local economists and investors plenty to mull over this week. (Delwyn Verasamy, M&G)

South Africa's latest inflation, mining, manufacturing and retail sales figures will give local economists and investors plenty to mull over this week. While overseas, China's monthly data deluge, European industrial production tallies and US budget negotiations will keep global markets on their toes. Here is your guide.

Central bankers in Botswana, Mozambique and Namibia will announce their latest monetary policy decisions this week. All three institutions are expected to leave rates unchanged.

The Bank of Botswana held its benchmark interest rate steady at 8% at its October meeting following three cuts earlier in the year. Officials had cited weak growth prospects as the reason behind their previous rate reductions, but the country's latest growth figures came in better than expected and inflation remained within the bank's target band for the fifth consecutive month in October.  

Like their counterparts in Botswana, officials at the Banco de Moçambique put a stop to their policy loosening in October. The central bank left its main rate unchanged at 8.25% following three rate reductions earlier in the year. With inflation risks on the rise – partly due to the base effects of extremely low inflation last year – the bank's monetary policy committee is likely to maintain their current wait-and-see stance in December.

Despite warning that economic growth would slow this year from last, the Bank of Namibia also left its lending rate unchanged, at 5.5%, in October. Disappointing observers, officials failed to provide an update to the growth projections that they released in August and made no comment on recent upward revisions to last year's gross domestic product (GDP) figures. Many will be hoping for more clarity following the bank's final meeting of the year.

Beyond these central bank meetings, inflation snapshots will dominate Africa's economic calendar this week. Egypt will release November consumer price index (CPI) readings on Tuesday. Ghana and South Africa – where inflation likely decelerated to 5.3%, year on year, from 5.5% in the previous month – will follow on Wednesday. Figures from Senegal, Namibia and Angola are also expected this week.  

In addition to CPI data, South African markets will be on the lookout for October's mining and manufacturing reports on Tuesday and retail trade figures on Wednesday. 

United States
The US treasury department's latest monthly budget report – scheduled for release on Wednesday – is likely to show that America's budget deficit narrowed to $167-billion in November from $172-billion at the same time last year. The reduced gap is attributable, primarily, to automatic spending cuts agreed to by Congress earlier this year. 

US House and Senate negotiators are barrelling up against a self-imposed deadline of Friday to propose a budget that would replace some further automatic cuts scheduled to begin next month. The current agreement authorising government spending expires on January 15 and America will bump up against its debt limit – a self-imposed borrowing cap – again in February. 

On Thursday, attention will turn to weekly jobless claims figures and last month's retail sales report. Retail sales probably accelerated to 0.6% monthly growth in November from 0.4% growth in October as consumers began their holiday shopping in earnest. Consumer spending accounts for roughly 70% of America's economy – the world's largest – so indications that spending is picking up in the fourth quarter, after slowing in the previous three, would be welcome news. 

Also of note this week, the US treasury department will auction $82-billion in new debt and reopen $66-billion in previously issued securities. Officials will sell $27-billion in six-month bills and $32-billion in reopened three-month bills on Monday, $30-billion in three-year notes and $25-billion in 52-week bills on Tuesday, $21-billion in reopened 10-year notes on Wednesday and $13-billion in 30-year bonds on Thursday. Analysts will be watching the auctions closely in the run-up to next week's Federal Reserve policy meeting.  

Europe's manufacturing sector will take centre stage this week. A series of industrial production releases will give the first hint of where Europe's economy is headed in the final quarter of the year. 

The Czech Republic, Turkey and Germany – Europe's largest economy – will release reports on Monday. France, Romania, the Netherlands, Sweden, Italy and the United Kingdom will follow on Tuesday. Figures for the eurozone as a whole are due out on Thursday. 

Analysts expect Germany's numbers to show that output, adjusted for seasonal swings rose 0.7% from September to October, an improvement on the 0.9% decline recorded for the previous month. France's production likely edged up 0.1% over the same period, following the 0.5% monthly contraction reported for September. The UK's industrial production likely slowed to 0.4% monthly growth from 0.9% previously. Eurozone production likely moved back into positive territory, expanding by 0.3% on a monthly basis in October following September's 0.5% decline.

Beyond this data, economists and investors will be paying close attention to a gathering of European finance ministers in Brussels on Monday and Tuesday. Officials are meeting to discuss aid talks with Greece and Cyprus's progress on its bailout programme. Policymakers will also discuss the European Union's efforts to create a single resolution mechanism (SRM) for eurozone banks. 

Construction of an SRM is the second phase of the eurozone's plans for banking union and aims to set-up a centralised authority capable of winding down and restructuring failing banks. The ministers are attempting to meet a year-end deadline set by their bosses, but deep divisions remain. 

China's monthly data deluge will dominate Asia's economic calendar this week. Officials in Beijing released trade figures on Sunday and inflation figures on Monday. 

In an encouraging sign of stronger global demand, China's latest trade figures showed that the country's trade surplus swelled to $33.8-billion last month, the largest level in more than four years. Exports rose 12.7% while imports grew 5.3%. 

China's consumer price index (CPI) rose 3% last month from a year earlier, down from 3.2% in October. Prices at the factory gate – as measured by the country's producer price index (PPI) – fell 1.4% in November from a year earlier, less than the 1.5% decline recorded in October. 

Industrial production, retail sales and fixed asset investment data are scheduled for release on Tuesday. Economists forecast a 10.1% year on year rise in industrial production for November, down slightly from October's 10.3% gain. Retail sales growth is expected to have slowed to 13.2% last month from 13.3% in October. Urban fixed asset investment is likely to remain at 20.1%, year to date.

Finally, China will release money supply and new yuan lending data sometime between December 10th and 15th. Money supply is expected to have expanded by 14.2%, year on year, and lending to have swelled to CNY577-billion in November. 

Elsewhere in the region, Japan revised estimates of third quarter economic growth lower on Sunday. The revised data showed that the world's largest economy grew by 0.3% in the third quarter, down from a preliminary estimate of 0.5%.

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