Trade balance and rolling average
  • The magnitude of the trade surplus narrowed in August to R5.9bn from R9.3bn (revised from R9.0bn previously) in July but exceeded market expectations of R2.1bn. 
  • Seasonal considerations in the month of August typically see month to month lower export growth compared to import growth. Indeed, import growth of 16.3% m/m outpaced export growth of 11.0% m/m, resulting in the smaller surplus than in July. 
  • In August, import growth was underpinned by a 65% m/m rise in mineral product imports which could be linked to the higher international oil price in July and August. 
  • On a cumulative year to date basis, exports increased by 5.8% y/y whilst imports contracted by 2.1% y/y yielding a trade surplus of R43.5bn compared to a deficit of R13.7bn in the same period last year. 
  • Commodities have accounted for the export performance so far this year. In the first eight months of the year exports of mineral products, precious metals and base metals have risen by 34.0% y/y, 6.2% y/y and 2.8% y/y respectively.
  • Import compression has been broad based. Imports of agriculture products have contracted by 35.8% y/y as domestic agriculture output has recovered post the drought. Imports of consumption goods such as clothing have contracted by 6.8% y/y, whilst capital goods imports such as machinery and equipment fell by 8.7% y/y. 
  • This is reflective of subdued investment and consumption activity which is unlikely to meaningfully recover amid persistently depressed consumer and business confidence. As such, import growth should remain constrained. 
  • In contrast, SA’s export performance should continue to derive support from the synchronised global economic upswing. Data for Q2.17 confirmed that global growth lifted on improving conditions in both advanced economies and emerging markets. The Global PMI and export orders have remained in expansionary territory in Q2.17 suggesting sustained positive momentum for manufacturing production and trade going into Q3.17.
Figure 2: Global manufacturing PMI