The writer says even if the Treasury’s independence and SA’s investment-grade credit status are maintained and economic growth improves, a major historic challenge appears to have been provoked. Picture: SUPPLIED
The writer says even if the Treasury’s independence and SA’s investment-grade credit status are maintained and economic growth improves, a major historic challenge appears to have been provoked. Picture: SUPPLIED

THE first release of this year’s sectoral data, which will have a bearing on economic growth expectations, is due this week.

Manufacturing and mining data are first on the list, followed by retail figures. The data will come at a time when the World Bank has revised the country’s growth prospects to 1.4%, compared with 1.3% last year.

However, there will have to be some improvements in manufacturing and mining output to achieve this modest forecast.

The retail sector, which has been the real driver of growth in gross domestic product (GDP) so far, needs to maintain its overall performance growth.

Manufacturing production for November, due out on Tuesday, is expected to be in positive territory after contracting 2.1% in October. Economists have pencilled in an annual monthly growth of 0.24, from -1.7% in October last year.

Mining experienced a torrid year and economists expected a moderate improvement in November. The sector contracted 4.6% in October, with the prediction for November at -2.42%.

Retail sales for November are set to be released, according to the Statistics SA schedule. The sector reflected strong annual growth of 3.3% in October, but this was expected to slow to 3.24% ahead of the festive season.

Investors will be looking to increased output in these sectors to support sagging share prices on the JSE.

The expected slowdown in the retail sector was also reflected on the bourse on which the food retailers index shed 1.57% last year and had contracted more than 6% in the first trading week of the year. General retailers did slightly better with 8.8% growth last year, mainly because of some rand-hedge diversification, but the sector has been more than 5% in the red so far this year.

Last year was one to forget for mining stocks on the JSE, even those diversified into global markets. Lower commodity prices, with Brent oil falling 34% and platinum spot down 26%, caused havoc among mining shares — Anglo American lost 67.9%.

The weaker rand, which lost more than 30% of its value against the greenback during the year, should theoretically be supportive of mining shares, as it increases foreign earnings.

However, the weaker currency increases input costs for mining production investment.

Also, for the sector to be supportive of capital growth in its share base, domestic production must increase.

The same criteria are necessary for manufacturing. But the industrial sector on the JSE also includes many rand hedges, including SABMiller and Naspers, which are the most highly rated shares on the bourse.

Naspers is trading at a price equity ratio of more than 100.