Any hope that there would be a decline in retail sales similar to the growth slowdown in vehicle sales were dashed after Stats SA released data which showed that retail sales rose from an 8,8% y/y growth rate in August to September's 13,6%, the largest rate of increase since 1999. Brait's Colen Garrow says that the rise in retail sales is underpinned by demand for credit, such as instalment sales credit and leasing finance. Trading updates from listed retailers have been upbeat and companies seem to be bracing themselves for record Christmas sales.
Growth in manufacturing production jumped to 7,5% y/y in October from a revised rate of 2,1% in September. JP Morgan economist Marisa Fassler points out that while the weaker rand has boosted the performance of the sector over the past few months, "the strong October outcome was largely due to base effects". Still, she says, manufacturers are reporting higher domestic and export sales volumes and are more positive about the economy. The latest BER survey shows that confidence increased strongly by 8 points to 75 index points in the fourth quarter.
SA's gross gold and foreign exchange reserves rose by almost US$500m in November to breach the $25bn level for the first time. Both the gold component (up $150m to $2,55bn) and the forex reserves (up $340m to $22,49bn) contributed to the rise. The Reserve Bank used the slightly stronger rand (R7,25 vs R7,45 in October) to build up its dollar holdings. The international liquidity position (net reserves) rose to $22,17bn in November from October's $21,41bn, as government repaid $250m of its three-year $1bn syndicated loan signed in 2004.
Gold dropped 2,5% to a two-week low of US$625/oz last week, weighed down by a fall in oil prices. The metal declined further towards the end of the week as a recovery in the US dollar prompted investors to lock in profits. A stronger dollar results in the metal being more expensive to holders of other currencies. However, gold gained again on Friday as bargain-hunters returned.
Expectations of milder weather in the US and ample fuel stockpiles caused oil prices to decline by around 2% last week. In absolute terms, US crude-oil stocks are currently at their highest levels since 1991. However, the chance of another oil output cut this week by Opec provided a floor for prices, which have been stuck in a tight range since late September.
Southern copper share price |
Southern Copper, one of the world's biggest producers of the red metal, said last week it had raised its estimates for reserves and mine life at its Toquepala and Cuajone copper mines in southern Peru. After a four-year study, the company raised its reserves estimate at Toquepala by 83% and the mine's life by 23 years. The mineral reserves estimate at Cuajone was raised by 8% and its life by three years. Company president Oscar Gonzalez said the implication of this was that annual production would rise by 30 000 t at each mine from 2009. The increase in Southern's reserves comes amid high copper prices, which have soared on strong global demand. Copper on the LME is currently trading at US$6 800/t.
About 800 workers at Alcan's 400 000 t Alma aluminium smelter in Quebec could go on strike early next year if stalled contract talks do not advance, union officials said last week. About 89% of union members rejected the company's latest contract offer over concerns about higher wages and job protection. The union's strike mandate means workers could legally go on strike in January. Alcan, the world's second-largest maker of aluminium, said it wanted to resume talks.
Ranking the Analysts 2009
