Economic week ahead: Is SA's economy growing?
South Africa and Nigeria will release second quarter gross domestic product (GDP) readings this week.
South Africa's economy grew a mere 0.9%, quarter on quarter, in the first three months of 2013. This lacklustre performance led the International Monetary Fund (IMF) to revise its full-year growth estimate for the country down to 2% from 2.5% previously. Consensus is that growth picked up to 3.2%, quarter on quarter, and to 1.9%, year on year, during the April to June period.
Nigeria's economy expanded 6.56% during the first quarter of 2013 from a year earlier.
The IMF expects full year growth of 7.2% in 2013.
Elsewhere on the continent, Angola and Zambia will provide consumer inflation updates this week. Ghana and South Africa will report producer price inflation. And Namibia, Morocco, Ghana and Kenya will release money supply figures.
Policymakers at Zambia's central bank are also expected to issue their latest rates decision this week. The Bank of Zambia's monetary policy committee left the bank's benchmark interest rate unchanged at 9.75% at their July meeting, after announcing 25-basis point increases at their two previous meetings. No policy change is expected this week.
America's data week will begin with last month's durable goods orders on Monday. Consensus is that orders fell 4% on a monthly basis in July following a 4.2% rise in June. Excluding transportation, orders likely rose 0.3% in July after remaining flat in June.
On Tuesday, the Conference Board's August consumer confidence index is likely to show some deterioration in sentiment. Economists expect the index to slip to a reading of 78 from 80.3 previously.
On Wednesday, the National Association of Realtors pending home sales index – a leading housing market indicator – is expected to show that rising interest rates slowed the pace of home purchase contract signers by 1% in July from June.
Thursday's revised second quarter GDP number is expected to show improvement. Economists polled by Reuters expect the figures to show that GDP expanded by 2.2% in the April to June period, up from an initial estimate of 1.7% thanks, largely, to a bigger contribution from net exports.
Finally, analysts expect Friday's personal income and outlays (spending) report to show that Americans' incomes rose 0.2% in July from June, down from a 0.3% in the May to June period. Consumer spending likely slowed to 0.3% from 0.5% growth previously.
Two business sentiment releases from Germany – Europe's largest economy – are the first big items on Europe's economic diary this week. The Ifo Institute's expectations and current conditions indices are both expected to edge higher on Tuesday, further fuelling optimism in the region following last week's positive purchasing managers' indices.
On Wednesday, economists and investors will turn their attention to the United Kingdom where Bank of England Governor Mark Carney will speak for the first time since unveiling the central bank's new "forward guidance" earlier this month. Carney pledged to keep rates at their record low level of 0.5% until unemployment drops to 7% from 7.8% at present, something policymakers do not expect to occur until 2016.
Given the strength of recent data releases in the UK, many have raised doubts that officials will be able to maintain ultra-low rates for that long. With markets pricing in an earlier rate rise, the pound – the UK's currency – has strengthened and bond yields have risen, raising government borrowing costs. Against that backdrop, Carney is expected to reiterate his commitment to the Bank of England's stated policy and clarify its implications during the question and answer period that will follow his speech on Wednesday.
At the end of the week, more positive news is expected from the eurozone. The currency bloc's latest economic and industrial sentiment gauges are likely to show continued improvement. The region's record-high unemployment rate, however, is likely to remain unchanged at 12.1%.
Japan – the world's number three economy – will release last month's retail sales figures on Thursday. Household spending, industrial production, inflation and unemployment data will follow on Friday.
Analysts at 4CAST suspect that retail sales fell 2.4% from a year earlier in July following a 1.6% rise in June and 0.8% rise in May. Real household spending likely rose 0.2% from a year earlier last month following a 0.4% drop in June.
Economists surveyed by Market News International expect Japan's latest industrial production data to show that production increased by 3.7% in July from June – largely as a result of higher general machinery and automobile output – following a 3.1% decline in June. Analysts believe that strong domestic demand and improving conditions in Europe and the United States will keep production on an upward trend over the coming months.
Japan's national core consumer price index is expected to show a 0.6% rise for July from a year earlier. If the consensus proves accurate, last month would mark the second consecutive year-on-year rise for the index and its largest gain since a 1% uptick in November 2008. More evidence of mild inflation would be welcome news to policymakers looking to end finally the country's decades-long struggle with deflation.
Japan's unemployment rate is expected to have held steady – after seasonal adjustment – at 3.9% in July, its lowest level since October 2008. Economists say a jobless rate below 3.5% – last observed in 1997 – could start to put upward pressure on wages.