Latest inflation figures released
The latest inflation data shows that South African consumers are likely to experience more pressure. Food inflation increased from 7% in January to 11.5% in July. On the positive side, Statistics South Africa indicated that the retail sector improved marginally, however still not as much as is needed to grow the economy.
Poor economic growth and increasing unemployment rates show that pressure on consumers’ disposable income is mounting. Investors therefore need to evaluate their investments to see in which companies their funds are invested. This will give them an indication of how current market conditions will affect their disposable income from investments.
Oil supply exceeds demand
The oil supply will continue to exceed the demand well into 2017 and despite the collapse in crude prices, US oil companies have added even more oil rigs and the oil markets will take longer to rebalance as demand growth slows more than expected. In South Africa, consumers will continue to benefit from low oil prices, provided that the rand remains more stable.
2015 retail figures compared to 2016
Statistics South Africa’s data has shown that retail figures closed at 0.8% higher in the last year. The sector performing the best in the last year was the pharmaceutical industry – increasing by 6.3%, which resulted in a contribution of R60.35 billion. Next in line was textile, clothing and leather products, growing by 4.3%, contributing R11.37 billion. The building industry showed less growth, contributing a mere R5.02 billion.
Unemployment rates and the local elections – more jobs needed to grow
The local elections seem to have eased unemployment rates and there was an increase in temporary job creation of 7.7%. This was due to the 49 000 temporary jobs created by the local government election campaign. Unfortunately, this was only temporary and the unemployment rate is back to 26.6%. 34% of this number relates to people in the age group between 24 and 34 years.
The JSE All Share Index strengthened by 0.28%. This was largely due to the rand strengthening of the rand, which closed at R14 against the US dollar. This positive news followed Janet Yellen’s announcement that an interest rate in the US is unlikely.