South Africa’s economy is on the rebound, and business confidence is growing, according to the latest economic data released for 2022, the Bureau for Economic Research (BER) reported on Monday.
The first batch of SA’s activity data for 2022 indicated that the economy had started the year on a “solid footing”, the BER said in its weekly newsletter.
“The Absa and Markit Purchasing Managers’ Indices (PMIs), as well as vehicle sales, rose in January.”
In addition, the high frequency Google trackers for January indicated that mobility in SA was notably higher than during the corresponding month in 2021. Unfortunately, the gloss of these indicators was dampened when Eskom implemented stage two load-shedding on Wednesday, downgraded to stage one on Friday and suspended on Sunday,” the BER said.
The Automotive Business Council’s new vehicle sales data for January showed that sales had risen by 19.5% year-on-year (y-o-y), even up 2.4% compared to January 2020.
Sales of passenger cars increased by 26.6% y-o-y, which was up 3.3% from January 2020.
President Cyril Ramaphosa’s State of the Nation Address (Sona), November activity data, and SA mining and manufacturing output data for December, which will be released on Thursday, will provide a further indication of the strength of the GDP recovery in the fourth quarter of 2021.
“Ramaphosa may provide some hints of what to expect in the upcoming budget.
“In particular, we are likely to get a further indication of government’s plans to extend income support to the unemployed.
“A roadmap for the implementation of structural reforms in 2022 may also be provided.
“In light of the return of load-shedding, the president will hopefully outline concrete steps to expedite the approval processes for new green energy investments,” the BER said.
The manufacturing sector started the year strongly.
“The Absa PMI rose to 57.1 index points in January, following a dip to 54.1 in December 2021.
“The improvement in the headline PMI was, to a large extent, driven by a rebound in the business activity index.
“The forward-looking index (expected business conditions in six months’ time) painted an even more optimistic picture, rising to an almost four-year high of 71.3 points,” the BER said.
Output expectations rose to their highest level since late 2014.
“The increased optimism about future business conditions in both PMIs is likely due to the expectation that Covid-19 will be less disruptive to the economy in 2022.”
However, there was a 9.3% y-o-y decline in vehicle exports during January, which is expected to improve during 2022 as major producers plan to introduce new models for the export market.
According to the SA Revenue Service’s external trade statistics released last week, the preliminary trade surplus for December 2021 was R30.18bn, with exports and imports up 29.9% and 34.2% respectively y-o-y.
The annual surplus for 2021 was R440.75bn, almost double the R271.57bn in 2020.
“The large surplus on the trade account is expected to wane in 2022 as imports rise amid the high oil price and a modest recovery in fixed investment, while some of SA’s key export commodity prices come off the 2021 highs,” the Bureau said.
