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Trade data this week to confirm if exports to China are recovering

By Ethel Hazelhurst

Ethel Hazelhurst

The first sign that a possible trade recovery in China is boosting South Africa’s exports will come on Thursday, when the SA Revenue Service (Sars) publishes last month’s trade data.

Between January and November last year, South Africa’s exports to the second-largest economy fell to R77.8 billion from R83.1bn in the comparable period of 2011. The fall came after consistent year-on-year increases, since 2009 – a trend that had remained in place until last August.

However, over the past two months there have been strong signals that China’s growth is accelerating. Recent data showed the country’s imports rose 28.8 percent last month from a year earlier – a figure distorted by movements of the Lunar New Year. Adjusted for working days, the growth was only 3.4 percent, according to the New York Times.

But the number was still above expectations “by a wide margin”, the publication reported. It quoted Zhiwei Zhang, the chief China economist at Nomura in Hong Kong, who said the trade data suggested “that external and domestic demand are both strong, which supports our view that the economy is on track for a cyclical recovery” in the first half of this year.

If Sars’ January figures show a significant improvement in South Africa’s export performance, it would suggest that the sale of goods to China – this country’s biggest export market – is picking up. In December South Africa’s trade shortfall with the rest of the world was R2.7bn, well down from R7.9bn in November.

A recession in Europe and Japan and slow growth in the US suggest any improvement in January exports would be due to demand from China. Any confirmation of this will come later on when the country breakdown is released.

Trade numbers are among a host of data due this week, which will provide a clearer picture of the state of the country’s economy.

Today Statistics SA will release fourth-quarter figures on gross domestic product (GDP) and the Reserve Bank will publish its composite lead index for the business cycle.

The former will show how the economy performed historically and the latter will show where it is heading.

Tomorrow will see Finance Minister Pravin Gordhan present his annual Budget in Parliament. Apart from his financial blueprint for the year, the occasion will provide an update on the Treasury’s expectations on growth. Last month, Reserve Bank governor Gill Marcus revised down her estimate for growth in the current year to 2.6 percent from 2.9 percent.

On Thursday, credit figures from the Reserve Bank will signal whether consumers are preparing to spend or whether they are likely to cut back in the year ahead.

And, on Friday, the Department of Energy will announce an increase in the petrol price, starting the following Wednesday. The price is adjusted each month to bring local fuel prices in line with a basket of international products. The increase is likely to be about 84c a litre of petrol, based on the extent of the average daily under-recovery in the month to date.

The Kagiso purchasing managers index will also be out on Friday. Last month it increased by 1.7 points to 49.1, remaining below the 50 neutral level – implying that manufacturing remained in recession.

Jeff Gable, the managing principal for research at Absa Capital, said the February figure could reflect an improvement in manufacturing output.

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