Recent data shows better-than-expected house price growth; further demonstrating the decoupling of economic fundamentals and housing market outcomes. Labour market weaknesses remain a major concern. Data shows, in line with our expectations, that job losses are now migrating to more white-collar workers.
The high-frequency economic activity data so far underscores our view that quarterly GDP growth steadily moderated in 1Q21. Private sector credit extension declined unexpectedly by 1.5% y/y in March. Producer inflation accelerated to 5.2% y/y in March.
The leading economic indicator extended its robust upward trajectory reaching its highest level since 1960. On the employment front, for two successive months, the 12-month rate of increase in job postings has been one of the most significant contributors to the growth of the leading indicator. The overall consumer inflation rate has resumed its expected upward trend.
Despite the evidently weak, though recovering consumer fundamentals, the FNB Estate Agents Survey shows that buying activity remains defiantly intact. In February retail sales volumes increased by 2.3% y/y, total mining output unexpectedly grew by 0.8% y/y and total manufacturing output declined by 2.1% y/y.
In South Africa 1.4 million jobs were lost, and wage income declined by approximately R28 billion relative to 2019, or just under 1% of GDP. However, the pandemic-induced income losses spread far wider than the labour market. Total manufacturing output declined by 2.1% y/y in February after declining by a downwardly revised 4.2% y/y in January.
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