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Standard Bank Group
The SA Daily 11 November 2019

Growth weakened in 3Q

  • Last week’s manufacturing output data disappointed; it contracted 2.4% y/y (and 2.4% m/m; 0.9% q/q) signalling that the manufacturing sector likely detracted 0.5 percentage points from GDP growth in 3Q19.  
  • This week’s retail sales figures will provide an indication of the strength of the SA consumer while mining production figures will give an indication of how the production sector played out in the 3Q19. In 2Q19, the trade sector (which is made up of 48% of retail sales) grew 3.9% q/q (seasonally adjusted and annualised) contributing 0.5 percentage points to GDP growth while mining production grew 14.4% q/q (largely assisted by the absence of load shedding in that quarter) after contracting 10.8% q/q in 1Q19 and contributed 1.0 percentage points to GDP growth.
  • Indications from the high frequency data are that robust GDP growth similar to 1Q19’s 3.1% q/q could not be sustained in 3Q19. This is in line with our quarterly estimates and our sluggish 0.5% GDP growth for 2019.
  • We expect retail sales to have increased by 1.7% y/y in September (versus consensus’ 1.9% y/y) from 1.1% y/y in August. Overall, retail sales (HCE) should average 1.4% y/y (1.3% y/y) this year before rising to 2.0% y/y (1.6% y/y) and 2.4% y/y (1.9% y/y) in 2020 and 2021 respectively. 

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