Latest news with #LaraHodes
IOL News
21 hours ago
- Business
- IOL News
South Africa's exports face decline amid economic challenges
All indications were that exports are set to slow given the current economic climate, recent indicators, as well as surveys showing that manufacturing operating conditions are deteriorating. Image: Supplied All indications were that exports are set to slow given the current economic climate, recent indicators, as well as surveys showing that manufacturing operating conditions are deteriorating. This is according to Investec economist, Lara Hodes, who said that the trade account surplus was likely to decrease further. On Thursday, the South African Reserve Bank (SARB) said that South Africa imported more than it exported during the first quarter of the year, although the country benefitted from the rand price of exported goods and services increasing more than that of imports when it comes to terms of trade. Hodes noted that a pending decline in exports ahead was based on data such as the Absa Manufacturing Purchasing Managers' Index (PMI) for April, which noted that the data tracking export sales returned to contractionary levels. In addition, according to the results of the JP Morgan Global Manufacturing PMI survey, global 'manufacturing operating conditions deteriorated' in April, with 'new export orders suffering its steepest decrease since August 2023,' Hodes said. She also noted that survey data from JP Morgan provided evidence of further potential weakness. Hodes said that globally, heightened levels of uncertainty around tariffs persist. S&P Global, she said, has indicated that the damage to confidence stemming from the radical shift in US trade policy, along with its unpredictability, is likely to linger, which will weigh on trade and growth prospects. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Trade balance trend Image: SARS/Investec The central bank said in its release that South Africa's trade surplus narrowed slightly by R5.2 billion as the value of merchandise imports increased more than that of goods exports. 'The increase in the value of imports and exports of goods and services in the first quarter of 2025 reflected both higher volumes and prices,' the central bank explained. It added that the current account deficit as a ratio of gross domestic product (GDP) remained broadly the same at 0.5% from the fourth quarter of 2024 to the first quarter of 2025. However, the agency noted that 'South Africa's terms of trade, including gold, improved in the first quarter of 2025 as the rand price of exported goods and services increased more than that of imports'. IOL
IOL News
4 days ago
- Business
- IOL News
SA's manufacturing activity firmly in contractionary territory in May
The Absa Purchasing Managers' Index (PMI) released on Monday indicated that the seasonally adjusted PMI decreased by 1.6 points to 43.1 in May 2025. Image: Supplied The Absa Purchasing Managers' Index (PMI) released on Monday indicated that the seasonally adjusted PMI decreased by 1.6 points to 43.1 in May 2025. Absa said that the PMI remained in contractionary territory for a seventh consecutive month. The PMI suggests that the manufacturing sector continued to suffer in May, despite some flickers of activity and demand improvement, albeit at extremely low levels. 'However, a decline in the supplier deliveries index pushed the headline PMI lower. The business activity index indicated some improvement, increasing by 3.4 points to 43.4 in May. New sales orders also increased, by 2.2 points to 38.3 in May. This was likely due to domestic demand recovering slightly as export sales continued to deteriorate at a rapid rate.' Absa said the supplier deliveries index has been tricky to interpret since the Covid-19 pandemic. 'Across the globe, the traditional signal of an increase being positive (with the index being inverted, so slower deliveries are seen as a positive sign as they are caused by increased demand for supplies) was no longer valid, as supply-chain bottlenecks and delays, and not higher demand, caused slower deliveries.' The purchasing price index decreased by 7.9 points to 60.4 in May due to fuel price cuts at the start of the month. 'A lower Brent crude oil price and a stronger rand, despite the fuel levy increase, bode well for further fuel price declines at the start of this month.' Absa added that the index tracking expected business conditions in six months' time increased by a significant 13.9 points to 62.5 in May, the highest level since the end of 2024. 'Sentiment improved as global tariffs were suspended, and businesses showed faith that local political disagreements on policy within the government would be resolved.' Investec economist Lara Hodes said, "The slide in the index was partly underpinned by a decrease in the suppliers' delivery index, which fell from 56.6 to 49.0. According to the BER, the decline in the index (the index is inverted so a decline suggests faster deliveries) could technically mean that logistical constraints are easing.' Hodes added that the business activity and new sales orders' indices remained subdued, well below 50, but did pick up modestly in May, despite a continued weakening in export sales. 'Worryingly, the employment index fell further into contractionary territory in May with a reading of 40.0 (42.9 previously). It has been in negative territory for fourteen consecutive months. Hodes said addressing the country's unemployment crisis remains a key imperative of the government. 'However, to achieve this, we need a substantial lift in confidence, driving investment and accordingly economic growth. Purchasing prices declined notably in May by 7.9 points to 60.4, supported by a further cut in fuel prices. Favourably, the index measuring anticipated business conditions (in six months' time) moved back into expansionary territory, reaching the highest level since the end of 2024. It climbed 13.9 points to 62.5.' Dr Eliphas Ndou, an economist and author at Unisa's Department of Economics, said the latest Absa Purchasing Manager Index indicates the manufacturing sector is struggling and is susceptible to weak demand conditions, political and trade uncertainty, which has implications for economic growth and employment outlook in the country. 'The Absa PMI has a statistically strong and positive co-movement with economic growth and is a leading indicator of economic growth. This means an improvement in the indicator would signal an improvement in economic growth. Whilst a weakening in the Absa PMI signals a weakening in economic growth.' Professor Waldo Krugell, an economist at North-West University, said that the PMI is still in contractionary territory and this is worrying for the growth prospects of the economy. 'The expectations are that this week's quarter one growth figures are not going to look good, but the PMI has shown business struggling in April and May as well.' Professor Bonke Dumisa, an independent economic analyst said that he is not surprised about this negative Absa PMI. 'The buyers in most manufacturing companies are usually the most conservative in the business, believing it is safest to adopt a cautious approach and be accused of opportunity cost in case they run short of products. The global uncertainty created by Trump's tariffs, wars and other consequential impacts of his "Executive Orders" have resulted in most buyers becoming very pessimistic about the business conditions. BUSINESS REPORT
IOL News
24-04-2025
- Business
- IOL News
Producer inflation cools to 0.5% in March, yet food costs signal price pressures
The PPI index dropped from 1% in February to 0.5% in March. The rate of growth in South Africa's Producer Price Index (PPI) declined on a yearly basis, dropping from 1% in February to 0.5% last month – which bodes well for inflation as this measure is seen as a forerunner of consumer price hikes. However, the latest print from Statistics South Africa showed that food price pressures are in the pipeline. Food prices have been a sticking point for inflation for some time, with the Pietermaritzburg Economic Justice and Dignity's March Household Affordability Index having shown that core staple foods such as maize meal, rice, cake flour, white sugar, sugar beans, samp and cooking oil all increased that month. PPI, which measures changes in the prices of goods and services sold by domestic producers to businesses, follows the Wednesday publication of the March consumer price index, which showed a decline on an annual basis from the 3.2% recorded in February to 2.7% Higher prices of food, beverages, and tobacco adversely affected the PPI figure, Statistics South Africa said on Thursday. The annual percentage change in the PPI for agriculture, forestry and fishing was 2.4% in March 2025, down from 7.6% in February. The main contributor to this rate was agriculture, a sector in which prices gained 2.4%. Wednesday's consumer inflation figure, which was lower than expected, showed no consumer price pressures, Old Mutual chief economist Johann Els said at the time. He explained that food, clothing, shoes, fur, appliances and vehicle inflation were all well contained. Lara Hodes, Investec economist, said on Wednesday that there was no impact on inflation in terms of fuel prices, given that the cost of a litre of petrol only dropped 7c in March. She added that 'a more substantial petrol price decrease was implemented in April, which will contribute to reducing inflationary pressure during that month'. For March, Statistics South Africa noted that electricity and water also recorded yearly gains in the PPI figure, with these utilities up 10%. This is a decline from the 10.2% recorded in February. Electricity accounts for 10.8% of this increase, it said. Several other areas of the PPI measurement showed increases, including mining, which was driven by gold and other metal ores.
