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Johannesburg - He bets that South Africa is already in a recession, economist Mike Schüssler said this week.
"Knowing that GDP shrank in the first quarter mainly based on a platinum strike, and fewer car exports as Mercedes upgraded their plant is but part of the story," he said in an opinion piece written for TreasuryOne.
The second quarter has one holiday more than normal, and the platinum strike is still in full swing, while the small rate increase is starting to have an impact.
"Construction was the best sector in the first quarter, but this sector does seem to have many ups and downs and is unlikely to stay as strong as it is at present," he said.
"Confidence is vital in this sector, and that is being eroded out of the economy."
Agriculture too seems to be recovering fast, which is great news for rural communities and tourism is seemingly getting extra foreigners visiting our shores.
"However, the good news ends there, and retail sales are unlikely to make as strong a showing when both interest rates and retrenchments are up," said Schüssler.
"The retail sector will still be positive, but much less than the last five years. However, that has its own problems as it means that imports are still growing faster than exports, despite a currency that has fallen by over 20%."
For the year to April imports were up 14.6%, while exports were up 12.5%. The trade weighted rand declined with an average of 14.4%.
"So, despite everything, imports had a slight increase, while exports faded away and as platinum stocks run out it is likely that South Africa will now see higher trade deficits as platinum exports fade away somewhat," he said.
This is further proof that the weaker rand is not helping exports much - even if platinum is excluded.
Manufacturing just looks ever weaker, and that is at the moment what the PMI and other indicators show.
"The PMI has been below 50 points for the last two months, and May was a disaster," said Schüssler.
"The last time the PMI was this low SA was in the middle of its last and deepest recession for a generation. One asks surely not again?"
Also, with another strike looming in the metal industry, it does not look to him like a major manufacturing turnaround is on the cards at present.
"Perhaps a little later we will see better performance but not in the next few months," he said.
"The footwear and sugar sectors are also on strike. Not all is well, and manufacturing is sinking as a sector in the economy."
Motor vehicle sales have also "fallen through the floor" in his view and "have not made a crashing sound only because they have not reached the bottom".
Even more worrying to Schüssler is the 40% year-on-year fall in the number of vehicle exports after a 27% fall in April.
"I think there is an 80% plus chance now for the second quarter to be negative and, therefore, placing the economy in recession," said Schüssler.
"Knowing that GDP shrank in the first quarter mainly based on a platinum strike, and fewer car exports as Mercedes upgraded their plant is but part of the story," he said in an opinion piece written for TreasuryOne.
The second quarter has one holiday more than normal, and the platinum strike is still in full swing, while the small rate increase is starting to have an impact.
"Construction was the best sector in the first quarter, but this sector does seem to have many ups and downs and is unlikely to stay as strong as it is at present," he said.
"Confidence is vital in this sector, and that is being eroded out of the economy."
Agriculture too seems to be recovering fast, which is great news for rural communities and tourism is seemingly getting extra foreigners visiting our shores.
"However, the good news ends there, and retail sales are unlikely to make as strong a showing when both interest rates and retrenchments are up," said Schüssler.
"The retail sector will still be positive, but much less than the last five years. However, that has its own problems as it means that imports are still growing faster than exports, despite a currency that has fallen by over 20%."
For the year to April imports were up 14.6%, while exports were up 12.5%. The trade weighted rand declined with an average of 14.4%.
"So, despite everything, imports had a slight increase, while exports faded away and as platinum stocks run out it is likely that South Africa will now see higher trade deficits as platinum exports fade away somewhat," he said.
This is further proof that the weaker rand is not helping exports much - even if platinum is excluded.
Manufacturing just looks ever weaker, and that is at the moment what the PMI and other indicators show.
"The PMI has been below 50 points for the last two months, and May was a disaster," said Schüssler.
"The last time the PMI was this low SA was in the middle of its last and deepest recession for a generation. One asks surely not again?"
Also, with another strike looming in the metal industry, it does not look to him like a major manufacturing turnaround is on the cards at present.
"Perhaps a little later we will see better performance but not in the next few months," he said.
"The footwear and sugar sectors are also on strike. Not all is well, and manufacturing is sinking as a sector in the economy."
Motor vehicle sales have also "fallen through the floor" in his view and "have not made a crashing sound only because they have not reached the bottom".
Even more worrying to Schüssler is the 40% year-on-year fall in the number of vehicle exports after a 27% fall in April.
"I think there is an 80% plus chance now for the second quarter to be negative and, therefore, placing the economy in recession," said Schüssler.
