In South Africa, attention will be on growth in the week ahead as Stats SA's release of the June manufacturing and mining output data for June. The second quarter continued to be challenging for these two sectors as Eskom intensified its electricity load-shedding schedule. In the manufacturing sector, seasonally adjusted output contracted by 0.4% and 2.0% m/m in May and April, respectively, as energy-intensive sectors such as steel manufacturing came under increased pressure.

While these consecutive declines create a base for some payback in June, analysts see the scope for this as fairly limited and expect output to record growth of only 0.7% m/m (sa), states Barclays.

Performance in the mining sector, which is further challenged by falling commodity prices, has performed even worse so far in Q2 with seasonally adjusted output plunging 4.7% m/m in both April and May. According to Barclays, while forecasting mining output is inherently difficult due to high volatility, and the low base created in April and May is likely to support some correction in June and forecast growth of 1.9% m/m (sa).





The bank estimates, "Based on our projections of June output in mining and manufacturing, overall quarterly growth in both sectors should be negative, which would point to a negative contribution to Q2 GDP growth. Whereas, Q2 GDP is expected to post 1.5% q/q saar growth due to the better performance of the service sector."