October's retail sales declined 2,3% y/y after dipping 5,6% in September. This pushed sales down by 2,2% y/y for the first 10 months of the year. Retail sales have been constrained since the Reserve Bank began raising interest rates in June 2006, as well as by stricter lending criteria. Slower employment growth and job insecurity brought on by the financial crisis have encouraged saving rather than spending. Analysts believe consumer spending is unlikely to improve in the short term, despite the Bank's 50 basis points interest rate cut last week.
Manufacturing output declined by 1,6% y/y in October, from growth of 4,7%. Vehicle manufacturers and metal producers reduced production in response to the impact of the global slowdown. The motor vehicles, parts and other equipment category fell by 18,1% y/y. Investec's purchasing manager s index (PMI), an indication of future manufacturing activity, dropped to its lowest level in the survey's history in November. RMB/BER and FNB/BER surveys show falls in business and consumer confidence, suggesting a deteriorating outlook for the sector.
Last week corn and soybean futures rallied on speculation that global production may fall after growers in South America planted fewer acres and used less fertiliser. Dollar weakness also made dollar-denominated commodities cheaper for holders of other currencies. Corn futures for delivery in March jumped 11% to US$3,51/ bushel and soybean futures lifted more than 7%. Wheat futures rose more than 4%. Agricultural futures have fallen in recent weeks as slowing global conditions dented demand prospects for food, ani-mal grain and alternative fuels.
The price of gold rose more than 8% last week, marking the biggest weekly increase in three weeks, as the movements in the oil price and dollar weakness boosted the metal's appeal as an alternative asset. The dollar fell 4% against a weighted basket of six major currencies on speculation that the US economic recession could stretch well into 2009. Data from Bloomberg suggest that since the turmoil in financial markets intensified in September, gold futures have tracked movements in the dollar 74% of the time. The price of gold jumped to a record of US$1 031/oz in March this year, but prices have come down considerably in recent months with gold futures now more than 20% below its earlier gains.
The price of crude oil has fluctuated in past weeks and is now more than US$100/bbl below its record high of $145/bbl reached in July. The recent swings in price came amid falling demand in major consuming countries and on concern that the developing world, including China, could also slip into a recession, which could potentially see oil prices dipping below $30/bbl. In 2002, before the bull run in energy prices took effect, Brent crude oil averaged about $30/bbl. The US department of energy reported that US energy demand for the week ended December 5 fell more than 8% compared with the same time a year ago. Deteriorating US usage has been the main cause for this year's sharp drop in demand.
Last week the price of platinum, which generally trades at a premium to gold, fell below that of gold after the US government rejected a US$14bn bailout plan for automakers in the US. The last time platinum traded at par or at a discount to gold was in December 1996. Platinum prices have fallen more than 60% since reaching a record high of $2 250/oz earlier this year, as waning demand for the metal, used in pollution-control devices for car and truck engines, dragged prices lower. Slowing global economic conditions combined with tighter credit markets have brought an end to the boom in the automotive industries, which have been important drivers of high platinum prices in recent years.
Ranking the Analysts 2009
