STANLIB's Weekly Focus 10 March 2008

EXECUTIVE SUMMARY OF STANLIB’s WEEKLY FOCUS

Economic Update

• Last week the BoE and the ECB decided to keep their interest rates on hold, despite the ongoing liquidity crisis conditions.
• US payrolls fell by a significant 63 000 in February, with the previous two months also revised lower. This is a clear signal of recession, and the Fed is likely to cut rates by a further 50bps when they meet again on 18 March 2008.
• Locally, further evidence of the slowdown in the real economy was confirmed with February car sales continuing to weaken, falling 15%y/y.
• Retail sales figures out this week are also expected to weaken further into negative territory.
• Hopefully the released figures will be enough to keep Tito’s interest rate decision flat when next the Monetary Policy Committee (MPC) meets this year, although inflationary risks are firmly to the upside.
• Note: After delaying the release of the January PPI (10.4%) data by a week, Stats SA have announced that the “time series data for the Producer Price Index has been temporarily withdrawn due to errors having been identified in the data.

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