Economic week ahead: Signs of slowing growth
Retail sales, an economic transactions index and trade survey results are the highlights of South Africa’s economic calendar this week. Elsewhere on the continent, Kenya and Ghana will provide growth updates, Nigeria will release trade data and Uganda will render a rates decision.
Overseas, Europe will report inflation data and the US will release housing and industrial production updates.
BankservAfrica – Africa’s largest automated clearinghouse – will release September’s BankservAfrica Economic Transaction Index (BETI) on Monday. The BETI is an early indicator of economic activity in South Africa in the near term.
August’s BETI fell 3.2% from a year earlier in August, the index’s largest year-on-year decline since February 2010.
August was also the first time since the BETI began in 2002 that the total number of transactions declined, year on year, for two consecutive months.
Next up, on Tuesday, the South African Chamber of Commerce and Industry (SACCI) will release results from last month’s trade conditions survey. SACCI’s Trade Activity Index (TAI) declined for a second consecutive month in August.
On Wednesday, August’s retail trade report from Statistics South Africa (StatsSA) will take centre stage. After contracting 0.9% from a year earlier in June, South Africa’s retail sales rose 2.4% in July. Consensus is that sales rose 2.5%, year on year, in August.
Elsewhere on the continent, Kenya will release second quarter growth figures on Monday. Second quarter trade figures from Nigeria – Africa’s largest economy – and a rates decision from Uganda’s central bank will follow on Tuesday. Wednesday will bring Ghana’s latest inflation and gross domestic product (GDP) data.
The first notable item on America’s data docket this week is Tuesday’s small business optimism index from the National Federation of Independent Businesses (NFIB). Economists expect the index to show a slight pullback to 95.8 in September from 96.1 in August.
On Wednesday, attention will turn to last month’s retail sales figures. A decline in demand for cars is expected to result in a drop in sales of 0.1% after the largest surge in demand for autos in four months drove overall retail sales up 0.6% in August.
On Thursday, industrial production figures will probably show a 0.4% rebound in September after recording a 0.1% decline in August. Demand for business equipment and consumer goods most likely drove the uptick.
Also on Thursday, the US House of Representatives will hold a hearing on America’s response to the Ebola outbreak in West Africa. Thomas Frieden, director of the US Center for Disease Control and Prevention, is among those scheduled to testify.
Closing out the week on Friday, government will release housing starts tallies for September and the University of Michigan will report preliminary consumer confidence figures for October.
Housing starts data may show that builders broke ground on 1.01-million new homes last month, up from 956 000 in August. The number of permits for new construction issued – an indicator of future activity – likely also rose, from 998 000 to 1.03-million over the same period. The University of Michigan’s sentiment index probably slipped slightly.
On Tuesday, Germany’s ZEW Institute will release their closely followed economic sentiment gauges for Germany and the euro zone as a whole. Markets expect ZEW’s German sentiment index to fall to zero from 6.9 previously. Analysts at 4CAST expect the group’s euro zone index to fall to 10.0 from 14.2.
Euro zone industrial production figures, also scheduled for release on Tuesday, are likely to be grim. Consensus is that output fell 1.7% July to August and 0.9% from a year earlier.
On Wednesday, the United Kingdom’s latest employment data may show that the country’s unemployment benefits claimant count rate fell to 2.8% in September from 2.9% in August. The country’s unemployment rate likely fell to 6.1% from 6.2% over the same period.
On Thursday, the euro zone’s latest inflation figures will come into focus. Europe’s harmonized index of consumer prices probably picked up slightly last month, but remains alarmingly low.
Speaking last week, European Central Bank (ECB) chief Mario Draghi said the central bank is willing to enact additional monetary stimulus if needed.
“We are accountable to the European people for delivering price stability, which today means lifting inflation from its excessively low level,” Draghi told reporters in Washington.
China reported weaker than expected trade figures on Monday, sending Asian markets downwards. It reported a 15.3% rise in exports in September from a year earlier and a trade surplus of $31.0-billion, down from $49.8-billion in August. Markets expected a $42.0-billion balance.
Later on Monday, India will report September’s import, export and trade balance figures. Japan will update on money supply and report last month’s corporate goods price index (CGPI).
Next up on China’s calendar, officials will release consumer and producer inflation updates on Wednesday. Analysts expect China’s consumer price index (CPI) to have risen 1.7% from a year earlier in September, down from a 2.0% rise in August.
Prices at the factory gate probably continued to fall in September. The country’s producer price index (PPI) may have fallen 1.5% in September after falling 1.2% in August.
Also on Wednesday, the Bank of Korea – South Korea’s central bank – will announce rates decisions. Policymakers cut their key interest rate by 25-basis points in August to 2.25% to stimulate the country’s slowing economy and my do the same at this week’s meeting.
On Thursday, Asian leaders – including Chinese Premier Li Keqiang – will gather in Milan for an Asia-Europe meeting. Li will deliver remarks.