Hope for 2nd quarter growth


Hope for 2nd quarter growth

Published Date: 2019-06-13 | Source: Stephen Gunnion | Author: Stephen Gunnion

Hope for 2nd quarter growth

After load shedding contributed to a fall in GDP in the first three months of the year, positive growth has started to emerge for the second quarter.

The economy showed signs of an improvement as the second quarter of the year got underway after GDP contracted the most in a decade in the first three months. If it continues, SA will avoid repeating last year's recession.

Following positive manufacturing data for April, released on Tuesday, Statistics South Africa reported a 2.4% year-on-year improvement in retail sales for the same month, twice as much as expected. In March, sales grew by just 0.1% from a year earlier.

According to Investec, the textiles, clothing, footwear and leather goods segment led the recovery, growing by 6.4%. General dealers, the biggest category, added a modest 0.5% to the headline reading, the bank said. Retail inflation registered 2% in April from 2.6% in March.

Manufacturing production also beat forecasts for April, jumping by 4.6% year on year, following March's 1.3% lift. Investec said the absence of load shedding, experienced in the first quarter of the year, would have supported the improved performance. However, it said prospects for the sector remained fragile due to muted domestic demand. Export demand also remained a concern against a backdrop of waning global export order growth, exacerbated by trade tensions between the US and a number of other countries, most notably China.

Manufacturing sector activity contracted 8.8% on a seasonally adjusted annualised basis in the first quarter of the year. The manufacturing, mining and agricultural sectors were largely behind the 3.2% contraction in GDP, the worst since the end of the global financial crisis in 2009.

Mining production data for April is due for release today.

Retail stocks were largely unmoved by the improved data yesterday. The JSE's General Retailers Index shed 0.5% while the Food & Drug Retailers Index gained 0.1%.

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