Stats SA is expected to reveal June’s manufacturing data this week, which will be a key factor in shaping the economic outlook for the second quarter. After a 0.6% year-on-year decline in manufacturing output in May, experts predict a further decrease of 1.2% in June. The Absa purchasing managers’ index (PMI) for June indicated a subdued sector, with the business activity subindex declining and new sales orders remaining lackluster.
Despite this, economists at the Bureau for Economic Research (BER) suggest that manufacturing output may have actually increased during the quarter, thanks to a strong performance in April. The July domestic PMI reading showed significant improvement, moving back into positive territory after weak showings in May and June. This early indicator suggests a potentially stronger performance for the economy in the third quarter.
The recent formation of a government of national unity and stable electricity supply, with no load-shedding for over four months, have likely contributed to improved confidence in the economy. The SA Reserve Bank will publish the gross foreign exchange reserves for July this week, with FNB economists noting that changes were mainly due to valuation and asset price adjustments.
Internationally, the US’s June trade numbers are expected to show a smaller deficit than in May, while China’s trade data for July is anticipated to reveal another robust surplus. China has increasingly relied on exports to boost its economy amid challenges in the property market.
S&P Global will also release the final July PMIs for major economies like China, the US, and the UK. These indicators will provide further insights into the global economic landscape and potential trends moving forward. Keep an eye on these developments as they unfold throughout the week.