Today’s local data card will be headlined by the S&P Global South Africa economy-wide PMI. The PMI is an important leading indicator of domestic activity and provides insight into economic constraints. Notwithstanding palpable GNU-related confidence since the elections in May, improved policymaking is still needed to reverse South Africa’s deindustrialisation. The economy continues to face structural headwinds, which have kept the PMI in contractionary (sub-50) territory for the majority of the past year. It did, however, break above 50 in August, and may remain there for a while due to less load shedding, softer inflation, and the prospect of SARB rate cuts.
Internationally, the market will have the ISM services index out of the US to digest ahead of tomorrow’s widely-anticipated monthly employment report. According to Bloomberg’s median consensus figure, the US services PMI will remain near 51.5 in September. Recall that the ISM services index expanded at a modest pace for a second month in August as a measure of employment effectively stagnated and order backlogs slumped. Although trending broadly lower from a peak of 67.1 in November 2021, US service activity remains in expansionary territory. This is keeping the Fed from signalling more aggressive rate cuts in the months ahead, although the market is positioned for this to change rapidly as the US business cycle turns.