South Africa's PMI and car sales data next week to give first hints of Q3 activity

The week ahead is fairly light in terms of data releases in South Africa, but after the recent string of disappointing activity data during Q2, the July PMI indicators and new car sales data should be interesting as early estimates of growth momentum during Q3. 

In the new car sales report, domestic car sales data are likely to continue to reflect very little improvement in domestic demand, particularly against a backdrop of weak consumer confidence and weak credit growth. We thus look for domestic car sales to have contracted a further 4.0% y/y. 

"By contrast, further normalisation of car exports is likely to see foreign sales growth of 39.4% (May: 33.8%), although the magnitude here also needs to be seen against the context of a low base last year related to a factory retooling by a major manufacturer", says Barclays. 

Limited scope is seen for a strong improvement in July, particularly given that electricity load-shedding remained intense in July, which is likely to have weighed on industrial firms. Nonetheless, the June data were an overshoot and expect a slight correction to 50.1 in July.

"As a result, the Bank of Zambia is expected to maintain the tight policy stance as the prospect for easing fades", added Barclays.