All eyes on whether SA escaped recession

Whether SA entered a technical recession — defined as two consecutive quarters of economic decline — will be revealed at 11.30am when Statistics SA releases the second quarter’s gross domestic product (GDP) figures.

The economists’ consensus, according to a poll done by Trading Economics, is that the quarterly change in SA’s GDP will have rebounded to slightly above zero from the first quarter’s 2.2% contraction.

“Key available data releases for the second quarter point to a weak GDP outcome, although the country may avoid a technical recession by a fine margin,” Investec Economist Lara Hodes said in a note emailed on Monday.

“The industrial production sector — mining, electricity and manufacturing production — narrowly missed a further contraction in the second quarter, recording quarterly growth of 0.9%, buoyed by better than expected mining data,” Hodes said. “This versus the first quarter’s 7.8% plunge.

“However, the agricultural sector is expected to have contracted substantially versus the first quarter, while second-quarter published trade data also point to another quarterly decline.”

The JSE’s all share index, which managed to swim against Monday’s negative tide by gaining 0.07%, again faces the headwinds of gloomy Asian markets.

Australia’s ASX 200 index was down 0.36%, Japan’s Nikkei 225 index was down 0.27%, and Chinese markets were flat.

The rand was trading at R14.87 to the dollar, R17.25 to the euro and R19.13 to the pound at 6.40am.

Discovery said on August 23 that its headline earnings per share (HEPS) for the year to end-June grew by up to 35%.

Last year the insurance group released its results at 9am.

Civil engineering group Wilson Bayly Holmes-Ovcon said on August 23 it expected to report on Tuesday its HEPS for the year to end-June grew by up to 10% — in contrast to other JSE-listed construction groups, which have reported losses.

But Wilson Bayly Holmes-Ovcon warned the increase was mainly due to accounting changes.

“Earnings per share have been positively affected by the accounting treatment required by IFRS 3 in respect of the group’s increased interest in the Byrne Group, which increased from 40% to 80% on June 18 2018,” the trading statement said.

“Under IFRS the group is required to first dispose of its 40% interest in the company and recognise either a gain or loss thereon. Thereafter the group reacquires the 80% interest and recognises goodwill or a bargain purchase as necessary.

“Shareholders are also reminded that in the previous financial year the group recognised a one-off expense of R170m in respect of the settlement agreement signed with government in October 2016.”

Libstar, the food group that listed in May, said on August 17 its interim HEPS from continuing operations would fall by up to 56% and its headline loss from discontinued operations would worsen by up to 60%.

“Gross profit margins were negatively impacted by a national oversupply of fresh mushrooms and the lower-margin Sonnendal Dairies business acquisition, which has enhanced the group’s yoghurt manufacturing capabilities,” the trading statement said.