Economy & Business News – 04 March 2024

ECONOMY & BUSINESS

• The Absa Purchasing Managers’ Index (PMI) improved in February. The headline PMI rose from 43.6 to 51.7 points. While this is an increase, the business activity remains more subdued. Indeed, of the five subcomponents of the PMI only suppliers’ performance is above 50 – although, encouragingly, new sales orders are almost there. Despite remaining in negative terrain for a second month, the business activity index recorded a solid increase to reach 48.6 in February. New sales orders performed even better, with the index rising to 49.9. Respondents were more upbeat about exports, possibly signalling some alleviation of the congestion and disruptions at local harbours. The inventories index also improved, which may be due to the same reason – or producers finding alternative ways to receive the required input products. (Source)

• Aggregate domestic new vehicle sales in February 2024, at 44,749 units, reflected a decline of 413 units, or a fall of 0,9%, from the 45,162 vehicles sold in February 2023. Export sales recorded a sound increase of 8,526 units or 27,5%, to 39,517 units in February 2024 compared to the 30,991 vehicles exported in February 2023. Overall, out of the total reported industry sales of 44,749 vehicles, an estimated 37,913 units, or 84,7%, represented dealer sales, an estimated 9,6% represented sales to the vehicle rental industry, 3,4% to government, and 2,3% to industry corporate fleets. The February 2024 new passenger car market at 28,857 units had registered a decline of 925 cars, or a loss of 3,1%, compared to the 29,782 new cars sold in February 2023. Car rental sales accounted for 12,9% of new passenger vehicles sales during the month. Domestic sales of new light commercial vehicles, bakkies and mini-buses at 13,306 units during February 2024 had recorded an increase of 328 units, or a gain of 2,5%, from the 12,978 light commercial vehicles sold during February 2023. Sales for medium and heavy truck segments of the industry reflected a mixed performance for February 2024 at 645 units and 1,941 units, respectively, which is a decline of 54 units, or 7,7% from the 699 units sold in February 2023 in the case of medium commercial vehicles, and, in the case of heavy trucks and buses an increase of 238 vehicles, or 14,0%, compared to the 1,703 units sold in the corresponding month last year. The February 2024 exports sales number at 39,517 units reflected an increase of 8,526 vehicles, or 27,5%, compared to the 30,991 vehicles exported in February 2023. (Source)

• Fitch says government is optimistic. Fitch Ratings believes the revised revenue projections and the deficit for fiscal year 2024/25 are optimistic, and says the National Treasury is likely to have to allocate more resources to state-owned companies. In its response to the 2024 national budget presented by Finance Minister Enoch Godongwana last Wednesday, the US-based credit ratings firm said the South African government had not factored additional support it will have to give to SOEs into its debt forecasts, which is why the latest fiscal projections show smaller budget deficits than previously forecast. (Source)

• Caution on reserves. S&P Global Ratings has cautioned that the government’s decision to access the paper profits on South Africa’s gold and foreign exchange reserves could fuel inflation and put the Reserve Bank’s independence at risk, unless the money is carefully managed and subject to strict rules. The ratings agency also warned that tapping the profits could lead to spending increases that may be difficult for the government to reduce. (Source)

• New Transnet CEO. Minister of Public Enterprises Pravin Gordhan announced that Transnet veteran Michelle Phillips had been appointed to lead the state-owned rail, port and pipeline company. Phillips, who has more than 20 years’ experience working at Transnet, most recently as CEO of Transnet Pipelines, was appointed acting CEO after several high-level resignations last year. Gordhan also announced the appointment of Nosipho Maphumulo as the group CFO. Business Leadership SA and Business Unity SA said they welcomed the appointment of Phillips. The National Treasury has provided Transnet with a R47 billion guarantee facility to support its recovery plan and to meet its debt obligations, but it provided for no bailout in the 2024/25 budget. (Source)