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Send  Print  Share  RSS  Twitter  15 Nov 2010

PREVIEWS: Upcoming Data Releases


Johannesburg, Nov 12 (I-Net Bridge) - Data releases for the coming week 15-19 November 2010.

Wholesale Trade - September 2010: Due Wednesday 17th November 2010 at 10h00

August's Wholesale trade data release pointed to a considerable improvement in domestic consumption patterns in the economy, which provides some encouragement for domestic economic activity in the face of waning activity in the international economy. Growth in wholesale trade sales improved to an impressive 4.7% y/y in the month, from 2.2% y/y in July. In particular, growth in wholesale sales in household goods increased to 11.2% y/y in August, from 10.5% y/y in July. The recent improvements in this category point to a recovery in household balance sheets, allowing consumers to spend more on less pressing expenditure items than in the earlier months of the year. Therefore, further improvements in whole trade sales growth are anticipated in the remainder of the year, especially with the 2010 Christmas season expected to show greater buoyancy than in 2009.

Nevertheless, looking ahead at the September figures, one should keep in mind a number of statistical distortions, which may result in short term volatility in the wholesale trade statistics. With the considerable rise in demand for vehicles during August 2010 and much of the improvement in wholesales sales growth being led by growth in the wholesale of manufacturing production inputs in the month, it is expected that growth may decline from August to September. This is further forewarned by the considerable decline in manufacturing production growth in September (to 1.4% y/y from 5.3% y/y in August), which was largely driven by strike action in the motor trade sector during the month.

Retail Sales - September 2010: Due Wednesday 17th November 2010 at 11h30

In correction of the considerable rise in retail trade sales during June and July as a result of the country's hosting of the FIFA World Cup during these months, growth in retail declined considerably in August to 4.6% y/y from 8.0% y/y in July and 7.6% y/y in August. However, excluding June and July, the average retail trade sales growth in the first five months of the year amounted to a mere 2.3% y/y from January to May. Therefore, Augusts' growth figure suggests an underlying positive trend in domestic consumption patterns, which is likely to remain for the remainder of the year, on the back of improving household balance sheets and a further decline in interest rates in September.

In contrast to the decline in the abovementioned dealers, growth in the sales of durable good dealers increased considerably in August from June and July. Growth in furniture and appliances sales surged to 21.1% y/y in August from 13.9% y/y in July, whilst sales in hardware, paint and glass sales increased to 5.8%y/y in August from -6.6% y/y in July. The improvement in demand for these goods, particularly hardware goods which had remained considerably muted during the bulk of the year, possibly due to being viewed as non-essential expenditure items, highlights the relief on household balance sheets lagging the decline in interest rates since December 2008 which has allowed for the improvement in the demand of these goods. It is also worth noting that these improvements correlated with a stronger rise in household credit demand in the month ( to 6.3% y/y in August from 5.2% in July and 4.9% y/y in June), which may be read as an indication of improving credit appetite at the household level. Therefore, one expects some improvement in retail sales growth in September, with an upward trend in retail sales growth anticipated for the remainder of the year due to the anticipation of a more buoyant Christmas Season in 2010 than experienced in 2009.

Building and Construction Statistics- September 2010: Due Wednesday 17th November 2010 at 11h30

Growth in building plans completed plummeted to -30.9% y/y in August, from a -4.9% y/y in July. This decline in growth is partly due to a statistical distortion related to a 25.9% m/m rise in building completions in August 2009. However, the distortion cannot fully explain the overall downward trend in building completions as indicated by the YTD figures. Growth in building plans completed declined to -24.5% y/y in the month, from -23.6% y/y in July and from a mere -8.5% y/y in August 2009. There is no doubt that completions is following in the dramatic downward trend of plans passed over 2008 and 2009. However, in contrast to the July figures, which had shown some improvement in building activity in the third quarter, the August data points to further deterioration in construction GDP in Q3 2010. This in turn is likely to further contribute to job losses in the sector.

Nevertheless, one finds some encouragement from the improvement in building plans passed in the month, promising to provide a much-needed stimulation to building and construction activity in a few months' time. Growth in total building plans passed improved to 1.9% y/y in August, from -5.0% y/y in July, led by the continued strength in residential building plans passed at 26.6% y/y in the month, from 24.4% y/y in July. However, given the signs of weakening demand in the residential building sector, one is concerned about the sustainability of the considerable improvements in residential building plans passed in recent months, which have prevented stronger declines in plans passed on a YTD basis (-11.2% y/y in August 2010, from -27.7% y/y in August 2009). The ABSA house price indices declined for the fifth consecutive month in September, depicting a downward trend in residential housing demand despite the improvement in the affordability of housing finance as a result of sharply lower interest rates. Without an improvement in demand for residential properties, further investment in this sector would result in an oversupply, which could send property prices on a downward spiral.

Motor Trade Sales (Stats SA) - September 2010: Due Wednesday 17th November 2010 at 14h30

As expected, growth in total motor trade sales increased considerably in August to 24.6% y/y in the month from 11.8% y/y in July, as a result of a surge in new motor vehicle sales in the month ahead of the fuels emission tax law implemented at the beginning of September. Growth in new motor vehicle sales increased to a dramatic 59.9% y/y in August from 29.8% y/y in July. Although being slightly exaggerated by a considerably lower base in new vehicle sales in August 2009, the rise in new motor trade sales increased new vehicles sales share of total motor trade sales to 29.0% in the month, from an average of 26.0% y/y in previous months. This only highlights the extent to which the August growth rate in total motor trade sales had been distorted by the sharp rise in demand during the month, which will no doubt correct to more sustainable levels in September. Subsequently, the marked increase in motor accessory sales growth from 5.7% y/y in July to 9.5% y/y in August is expected to correct downwards in months to come, also linked to the rise in new vehicle sales in the month.

In correction of the surge in new motor vehicle sales in August, growth in NAAMSA vehicle sales growth declined to 16.9% in September from 49.1% y/y in August, on the back of a m/m decline of -15.4%. Therefore, one can expect a decline in motor trade sales growth in September in line with this decline. Nevertheless, even the lower September growth rate can be considered relatively strong, especially if one takes into account the disruptions to supply which might have emanated from strikes in the vehicle components industry during the month. Furthermore, the recovery to in NAAMSA vehicle sales growth in October, to 18.3% was very much on a par with the average growth in vehicle sales for the year to date, of 18.7%, suggestive of an underlying upward trend in the demand for motor trade goods and services.

Civil Cases and Summonses - September 2010: Due Thursday 18th November 2010 at 10h00

Both the number of civil cases for debt summonses and judgments declined on a y/y basis in August, continuing to reflect improving financial positions of both persons and businesses in the economy, largely as a result of the significant decline in interest rates since December 2008. Civil summonses declined by a considerable -11.8% y/y in the month. Although the growth rate increased from -18.2% y/y in July, possibly linked to the inherent volatility in the monthly data, this did not interrupt the downward trend in the YTD growth rate, which declined to -5.6% y/y in August from -4.8% y/y in July and a significant 7.7% y/y in August 2009. Declines in summonses to private persons led the decline with a -12.3% y/y contraction in the month, promising to keep insolvencies in the negative growth territory of the last five months to July. One hopes that the decline in summonses to private persons is indicative of declining household debt levels in the economy, which would assist in the recovery of domestic consumption. Whilst summonses to businesses recorded a lower -7.7% y/y decline, August marked the first month of YTD contraction in summonses to businesses at -0.6% y/y.

Even more encouraging than the contraction in debt summonses, civil judgements for debt contracted by -20.9% y/y in August following a muted -2.4% y/y contraction in July. Interestingly, a stronger decline in judgements to businesses led the decline at -28.4% y/y in the month, versus -20.2% y/y for judgements to persons. On a YTD basis, judgements to businesses declined by an impressive -7.2% y/y in August 2010 in contrast to 14.5% y/y in August 2009. The above suggests that one can expect the contraction in compulsory liquidations to continue in the remainder of the year. Nevertheless, this does not rule out the possibility of a rise in voluntary liquidations in months to come as a result of growing uncertainty about business conditions in the medium to long term. Concerns are largely centred around the movement of the domestic currency of late and its effect on domestic exporting businesses.

Other Releases:

November MPC Announcement: Thursday 18th November 2010 at 15h00


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