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Economic week ahead: SA growth figures

Matt Quigley

Here is your guide to the data releases, central bank meetings and other events likely to drive markets in the week ahead.

Stats SA's first quarter gross domestic product data is expected to show that the country's economy is still struggling. (Reuters)

Economists expect Tuesday’s gross domestic product (GDP) figures to show that South Africa’s economy shrank in the first quarter. US growth data – due for release on Thursday – is also likely to indicate contraction.

Africa
  Policymakers at Angola’s central bank – the Banco Nacional de Angola (BNA) – will announce their latest interest rates decisions on Monday. Officials have maintained an accommodative monetary policy stance since early 2012. And BNA Governor Jose de Lima Massano indicated in April that, with inflation easing, the central bank has room to lower rates further.

Officials have left Angola’s benchmark policy rate unchanged at 9.25% since November of last year, but have made other policy adjustments over the period. The central bank cut the reserve requirement ratio for local currency deposits from 15% to 12.5% in January. And, at April’s policy meeting, raised the rate on its liquidity absorption facility for the second consecutive month to 1.5% and decreased the rate on its standing lending liquidity to 10% in a bid to reduce the costs of financial intermediation and increase resources available for lending.

On Tuesday, attention will shift to South Africa for updated growth figures. Statistics South Africa’s (Stats SA’s) first quarter gross domestic product (GDP) data is expected to show that Africa’s number two economy is still struggling. Economist surveyed by Reuters expect a 0.1% quarter on quarter contraction.

More South African data will follow later in the week. Stats SA will report April’s producer inflation data and contract price adjustment provisions (CPAP) on Thursday and, on Friday, the South African Revenue Service will report April’s preliminary trade figures.

Elsewhere on the continent, Ghana will report producer price inflation on Wednesday. Consumer inflation figures will follow from Zambia on Thursday and from Kenya and Uganda on Friday.

United States
  US markets will be closed on Monday in observance of Memorial Day. Economists and investors will confront a full data docket when they return to their desks on Tuesday.

First up on Tuesday morning, durable goods orders data is likely to show that orders fell 0.8% in April after recording their biggest consecutive monthly gains since the middle of last year in February and March. Despite April’s anticipated slippage, March’s data hinted that business investment will rebound in the second quarter.

Throughout the remainder of the day, the Conference Board will release this month’s consumer confidence data. The S&P/Case-Shiller housing price index will likely show price appreciation in 20-cities slowed in the year ended in March. And the Federal Reserve Banks of Dallas and Richmond will report regional manufacturing gauges.

On Wednesday, US President Barack Obama will deliver the commencement address at the US Military Academy in West Point, New York. Obama is under pressure from allies and critics to clarify his administration’s approach to global affairs after perceived weakness in the face of challenges from Syria, Iran, Russia and China.

On Thursday, first quarter gross domestic product (GDP) data is likely towill probably show that the US economy contracted for the first time in three years during the three months ended in March. Analysts expect that unusually brutal winter weather led the world’s largest economy to shrink by around 0.5%, quarter on quarter.

Finally, on Friday, the Commerce Department’s April personal income and outlays (spending) report is expected to show that incomes and spending both rose at a slower pace last month. Income likely grew 0.4% – down from 0.5% in March – and spending likely rose 0.2%, down from 0.9% in March.

US personal spending probably rose at a slower pace in April, according to a Bloomberg survey, after the biggest gain in almost five years put economic growth on track to accelerate in the second quarter. The Commerce Department reports at 08:30 in Washington.

Europe
  European markets will likely welcome the results of Ukraine’s presidential election when trading opens on Monday. Exit polls released immediately after voting ended on Sunday showed that pro-European billionaire Petro Poroshenko took more than 55% of the vote, preventing a run-off election in June.

With tensions still running high in Ukraine’s eastern regions, Poroshenko sounded a conciliatory note on Sunday. “The first steps of our entire team at the beginning of the presidency will concentrate on ending the war, ending the chaos, ending the disorder and bringing peace to Ukrainian soil, to a united, single Ukraine,” he said.

On Tuesday and Wednesday, consumer sentiment reports from France’s National Institute of Statistics and Economic Studies (INSEE) and GfK in Germany are likely to show no change from last month. Separate economic and consumer sentiment indices covering the euro zone as a whole – due out on Wednesday – are also seen holding steady.

On Thursday, attention will shift to the United Kingdom for the Treasury’s report on the country’s Help-to-Buy mortgage guarantee scheme. With fears mounting that a housing-bubble may be inflating in economists and investors will scrutinise the report’s figures closely.

Asia
  A series of statistical releases in Japan – the first since a controversial consumption tax hike took effect on April 1 – are the big items in Asia’s data diary this week.

Japan’s Ministry of Economy, Trade and Industry will report last month’s retail sales data on Thursday. Economists surveyed by Market News International expect the data to show that sales fell 3.3% from a year earlier, the first year on year decline in nine months.

On Friday, Japan’s Ministry of Internal Affairs and Communications will release April’s consumer price index (CPI) and household spending data and the country’s Ministry of Economy, Trade and Industry will release April’s industrial production figures.

Consensus is that April’s national core CPI – which excludes perishables – rose 3.1% from a year earlier. If the forecast proves accurate, last month’s gain would mark the 11th consecutive year on year rise in inflation and the highest rate recorded since April 1991. Excluding the direct effects of the tax hike, core CPI probably climbed 1.4% from a year earlier.

Household spending is widely expected to show a post-tax slump in demand. Economists expect Friday’s data to show that spending fell 3.1% from a year earlier in April after rising 7.2% in March.

Analysts expect industrial production to show a 2% monthly decline, the first fall in two months.  Economists forecast output in the April to June quarter will fall nearly 2.0%, quarter on quarter. If this proves true, it will mark the first production drop in six quarters.


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