Economic week ahead: SA unemployment update

Policymakers at America’s central bank will announce their latest rates decisions. Europe will update on inflation and confidence. Japan will conduct its monthly data dump and China will release an official forward-looking measure of the country’s manufacturing prospects. Here is your guide.

Statistics South Africa (Stats SA) will report second quarter labour force statistics on Tuesday. South Africa’s official unemployment rate rose from 24.1% in the fourth quarter of 2013 to 25.2% in the first quarter of 2014. Economists do not expect these grim figures to have improved in the second quarter of the year.

On Thursday, the South African Reserve Bank (SARB) will report June’s money supply and private sector credit extension (PSCE) growth figures, Stats SA will release June’s producer price index and the South African Revenue Service will print June’s trade figures.

No meaningful slowdown in money supply or credit growth followed the SARB’s 50-basis point rise to the country’s benchmark repo rate in January through May and consensus is that the trend continued in June. Consensus is also that M3 money supply – the broadest measure of money – grew 7.5% from a year earlier in June, down from 7.6% in May, and PSCE expanded 8.0% year on year, down from 8.3% previously.

Closing out South Africa’s week on Friday, the National Association of Automobile Manufacturers of South Africa will report July’s new vehicle sales. Given the overall weak state of South Africa’s economy, and the effects of recent work stoppages, analysts expect another negative year-on-year report.

Elsewhere on the continent, this week’s economic calendar is particularly light. Policymakers at Angola’s central bank will announce their latest rates decision on Monday. Later in the week, markets expect Kenya, Morocco and Namibia to release June money supply figures and Zambia to report its July consumer price index figures.

United States
There are two big events on America’s economic calendar this week: Wednesday’s policy announcement from the Federal Reserve and Friday’s monthly payrolls report.

In the run-up to Wednesday’s rates and broader policy pronouncements from the world’s most powerful central bank, markets will keep an eye on the National Association of Realtors’ pending home sales data, the Dallas Federal Reserve Bank’s regional manufacturing gauge on Monday and Conference Board’s consumer confidence index on Tuesday.

Following this info, the Fed’s Wednesday announcement is unlikely to create any drama. Economists and investors widely expect officials to maintain rates at current levels. Fed Chair Janet Yellen recently testified before the US Congress that she and her colleagues will keep interest rates low for a “considerable period”.

Wednesday will also see the release of America’s latest growth figures. Economists surveyed by Bloomberg expect the Commerce Department’s figures to show that the world’s largest economy expanded at a 3% annualised rate in the second quarter, largely as a result of an uptick in corporate investment, a quickened pace of inventory building and an uptick in home construction.

Friday’s nonfarm payrolls report is likely to show that employers added 233 000 positions in July &ndash down from 288 000 in June &ndash and that the country’s unemployment rate held steady at 6.1%.

A separate report from the Bureau of Economic Analysis and Commerce Department – also slated for release on Friday – will probably show that Americans’ personal income rose 0.4% and that consumer spending rose by the same rate in June.

On Monday, Italy’s Institute for Economic Studies and Analyses (ISAE) will release the first of this week’s European economic sentiment gauges. Markets expect the ISAE’s business sentiment index to remain largely unchanged, possibly rising from 100.0 to 100.2.

On Wednesday, attention will shift to consumer confidence figures from France’s National Institute of Statistics and Economic Studies and to the eurozone’s latest business climate, consumer sentiment, economic sentiment and industrial sentiment indices. Amidst continued worries over the situation in Ukraine and the continent’s general economic malaise, no improvement in opinion is expected in this month’s releases.

On Thursday, the eurozone’s latest inflation and employment data will take centre stage.

Economists expect the region’s harmonised index of consumer prices to have ticked-up a mere 0.4% to 0.5% from a year earlier in July. This would mark the tenth consecutive month in which inflation remained well below the European Central Bank’s target of around 2.0% growth.

Eurostat, Europe’s statistics agency, is expected to report that the region’s unemployment remained stubbornly high at 11.6%. The overall figure masks a sharp divergence between northern and southern Europe. In the former, labour market conditions have shown steady improvement. In the latter, the situation remains dire, particularly for youth.

Finally, Friday is manufacturing purchasing managers’ index day. Ireland, Russia, Sweden, Hungary, Norway, Turkey, Spain, the Czech Republic, Italy, France, Germany and Greece will report these forward looking indicators of economic activity along with the eurozone as whole.  

Japanese economic data will feature prominently over the coming days. Officials will release household spending, retail sales and unemployment data on Tuesday, industrial production figures on Wednesday and housing starts on Thursday.

Economists surveyed by Market News International expect household spending to have fallen for a third consecutive month in June, albeit at a smaller rate than the declines observed in May and April, as the dampening effects of April’s consumption tax increase dissipate. The median forecast calls for a 4% pullback from a year earlier, an improvement on May’s 8% year-on-year decline.

Retail sales also likely fell, by 0.5% from a year earlier, largely as a result of continued weakness in demand for durable goods. The country’s unemployment probably remained unchanged at 3.5%, its lowest level since 1997.

Industrial output likely fell 1.2% from May to June – marking the first decline in two months – largely as a result of diminishing automotive and electronic production. If the consensus estimate proves accurate, Japan’s production in the April to June quarter will have fallen 3.1% from the preceding three months, marking the first quarterly decline in two and a half years.

June housing starts may have fallen 11.3% from a year earlier to a seasonally adjusted annualised rate of 867 000 units. Again, April’s tax hike explains the decline.

At the close of the week, attention will shift to China’s official manufacturing purchasing managers’ index release. Markets are optimistic after a similar factory gauge released by HSBC/Markit last week rose to an 18-month high.

Subscribe to the M&G

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years, and we’ve survived right from day one thanks to the support of readers who value fiercely independent journalism that is beholden to no-one. To help us continue for another 35 future years with the same proud values, please consider taking out a subscription.

Related stories

Infrastructure key to economic recovery — Ramaphosa

The governing party wants localisation at the centre of its infrastructure-led strategy

October 7 strike: ‘Lukewarm’ action amid Covid-19 crisis?

After months of little action, the planned nationwide stayaway may not be an impressive show of force by the trade union movement

Citizens bear Covid’s economic scars

Data released this week is evidence of the scale of the financial and humanitarian crisis South Africa faces

Covid-19 jobs unlikely to bounce back

Evidence suggests that job losses triggered by the lockdown may be long lasting

‘Lockdown quarter’ sees jobs bloodbath

The decline in employment has been accompanied by a larger increase in economic inactivity, resulting in a 42% expanded unemployment rate

Global job losses linger after lockdowns

Developing countries have been hit harder by the Covid-19 downturn than in past economic crises

Subscribers only

Toxic power struggle hits public works

With infighting and allegations of corruption and poor planning, the department’s top management looks like a scene from ‘Survivor’

Free State branches gun for Ace

Parts of the provincial ANC will target their former premier, Magashule, and the Free State PEC in a rolling mass action campaign

More top stories

Why anti-corruption campaigns are bad for democracy

Such campaigns can draw attention to the widespread presence of the very behaviour they are trying to stamp out — and subconsciously encourage people to view it as appropriate

Tax, wage bill, debt, pandemic: Mboweni’s tightrope budget policy statement

The finance minister has to close the jaws of the hippo and he’s likely to do this by tightening the country’s belt, again.

SA justice delays extradition of paedophile to UK

Efforts to bring Lee Nigel Tucker to justice have spanned 16 years and his alleged victims have waited for 30 years

Former state security minister Bongo back in court

Bongo and his co-accused will appear in the Nelspruit magistrate’s court in Mpumalanga over charges of fraud, corruption and theft

press releases

Loading latest Press Releases…

The best local and international journalism

handpicked and in your inbox every weekday