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Economic week ahead: Lots of data, not as much electricity

In a presentation on the incident posted to the company’s website, officials said “it is very likely that load shedding will continue for the week”.

Assuming that they are able to access the internet, economists and investors will be on the lookout for a slew of data releases and central bank decisions over the coming days, from South Africa and abroad. Here is your guide.

Africa
South Africa’s data week will begin on Monday with October’s manufacturing purchasing managers’ index (PMI) reading from the Bureau for Economic Research, FNB’s October house price index and new vehicle sales figures from the National Association of Automobile Manufacturers of South Africa (Naamsa).

On Thursday, Statistics South Africa’s third quarter utilisation of productive capacity survey results and September electricity consumption figures will step into the spotlight along with Absa’s October house price index report.  

On Friday, the South African Chamber of Commerce and Industry (Sacci) will release October’s business confidence index and the South African Reserve Bank will release October’s statement of reserves. Markets expect gross and net reserves to remain largely unchanged at around $49-billion and $43-billion, respectively. 

Elsewhere on the continent, central bankers in Ghana and Kenya are expected to announce interest rates decisions this week.  Ghana’s consumer price inflation increased for the 13th consecutive month in September. The consumer price index (CPI) increased by 16.5% from a year earlier in September. 

As a result of inflationary, and other factors, policymakers are likely to raise Ghana’s policy rate from its current 19.0%, despite slowing growth in the country. 

In Kenya, policymakers have left the country’s benchmark rate on hold at 8.5% for over a year and are likely to stay their course until next year. In a recent poll by Reuters, all but one of the 14 institutions surveyed expect no movement on Tuesday. 

United States
Americans will head to the polls on Tuesday for the country’s mid-term elections. All 435 seats in the Unted States (US) House of Representatives and 36 of 100 seats in the US Senate are up for grabs.

Republicans are widely expected to retain control of the House. A gain of 13 seats, seen as a possibility by many analysts, would bring the Grand Old Party its largest majority in the lower chamber since 1928. The outcome of the battle for the Senate is less certain. Republicans need to pick-up six seats to take control from Democrats. 

On the data docket, America’s business week will begin on Monday with the Institute for Supply Management (ISM)’s latest manufacturing index. Consensus is that this forward-looking gauge of economic activity edged-up to 56.0 in October from 56.6 in September. Any reading above the 50-mark signals continued expansion. 

Next up, on Tuesday, international trade figures may show that the US trade deficit held steady at around $40-billion for the third consecutive month in September. Later in the day, September’s factory orders report is likely to show that orders fell 0.7% from August, an improvement on that month’s 10.1% decline. 

On Wednesday, the ISM’s non-manufacturing index is likely to show a slight decline, but remain firmly in positive territory. Current consensus is for a reading of 58.0.  Closing out the week on Friday, America’s monthly jobs report will take centre stage. Analysts surveyed by Bloomberg expect employers added 225 000 positions in October and that the country’s jobless held steady at 5.9%, a six-year low. 

Europe
Europe’s two most powerful central banks will announce policy decisions this week. Officials at the European Central Bank (ECB) and Bank of England will make their announcements on Thursday. With neither institution expected to change rates, ECB chief Mario Draghi’s post-meeting question and answer session will be the event to watch. 

Draghi is likely to face questions on the central bank’s recently reported bank stress test results and, possibly, on whether or not the ECB might consider adding corporate bond purchases to its bag of tricks as it continues to battle troublingly low inflation and lacklustre growth in the euro zone.

On the data front, Germany – Europe’s largest economy – will update a number of high-profile indicators later this week, including factory orders on Thursday and industrial production on Friday. 

German factory orders fell 5.7% from July to August, their largest drop since 2009, exacerbating fears of a slowdown in Europe’s industrial powerhouse. Markets expect this week’s release to paint a rosier picture, possible showing a 2.2% monthly rise in orders for September. Industrial production fell 4.0% in August, but also likely swung to growth, of around 2.0%, in September. 

Germany’s September trade data and current account report are also due out on Friday. A decline in exports reduced the country’s trade surplus to €14.0-billion in August from €23.5-billion in July, but the surplus may have swelled back to around €19.0-billion in September. Similarly, Germany’s current account surplus may rebound to €19.3-billion in September from €10.3-billion in August. 

Asia
Several of Asia’s central banks are likely to feature prominently in the region’s headlines this week. Policymakers at the Reserve Bank of Australia, Bank of Thailand and Bank Negara Malaysia will announce rates decisions over the coming days. Officials at all three institutions are expected to leave their benchmark rates on hold at 2.5%, 2.0% and 3.25%, respectively.

After they have announced their decisions – on Tuesday, Wednesday and Thursday &ndash the Bank of Japan (BOJ) will release minutes from the monetary policy committee’s October 6/7 meeting.  Officials at the BOJ shocked global markets on Friday with their announcement of an enormous increase to the bank’s already massive quantitative easing initiative. 

The BOJ will raise the ceiling of its annual government bond purchase programme by ¥30-trillion to ¥80-trillion, triple the pace of the bank’s stock and property fund purchases and increase the average duration of its bond purchases from seven to 10-years. Atypically, four of the bank’s nine policy board members voted against the additional measures, a dramatic shift from the unanimous support for the programme at its April 2013 inception.

Beyond these central bank events, highlights of the region’s data docket include manufacturing purchasing managers’ index prints from China and India and trade data from Indonesia, Australia, Malaysia and Taiwan.  On the corporate earnings calendar, China’s Alibaba will announce third quarter earnings on Tuesday, the company’s first earnings release since listing in New York. 

Another big name, Toyota, will follow on Wednesday.

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Matt Quigley
Matt Quigley writes the weekly economic preview for the Mail & Guardian. His blog on the South African economy can be found at www.thoughtleader.co.za/mattquigley

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