June 2018: Economies at a glance

United States:

  • Headline inflation rose to its highest level in 6 years in May 2018, to 2.8% in year-o-year(y/y) terms. The elevated print was largely due to base effects created by low inflation print in May 2017,as well as steep international oil prices, which fulled energy inflation in the month.
  • Wage inflation has steadily started to reflect the tightness in labor market,picking up to 2.7& y/y in May from a low of 1.5% y/y in September 2012.
  • Although core inflation remains closer to the 2% target, the underlying inflation gauge points to rising underlying inflation pressures.
  • Rising inflation and above-potential growth has led to a more hawkish stance from the United States Federal Reserve.


  • Economic sentiment remains positive in the Eurozone’s four-largest economies, but political noise in Germany, Spain and Italy could dent confidence levels in upcoming months,leading to a more moderate growth outcome.
  • Although the contribution to overall economic activity from household consumption dipped in the first quarter of 2018,macro fundamentals bode well for the outlook for the consumer.
  • Growth in consumer credits has recovered to 2009 levels, after eight years if deleveraging. Employment growth and positive real wages have further contributed to a rise in consumer confidence levels.


  • A focus on financial deleveraging has hurt growth in the manufacturing and investment inducstries. A shift in focus to internally led growth should lead to China shifting to a lower growth gear in upcoming years.
  • Some signs of stabilization have been noted,with business confidence starting to recover,although remaining below neutral. Similarly, negative growth in the lead indicator show signs of bottoming out. Manufacturing and services sentiment indicators have, in addition,stabilized in recent readings.
  • Although growth is consumer spend well worryingly in the second quarter of the year, consumer confidence remains at all-time highs.

South Africa:

  • After many quarters of subdued consumer confidence,the Ramaphoria effect( “citizens” thankfulness for the end of the end of the Zuma season” or ” reward for just not being Zuma” has driven sentiment to its highest level on record.
  • Lower inflation has supported higher growth on real wages. Growth of the public sector real wages has exceeded growth of real wages in the private sector.
  • Wealth effects ( house and equity price inflation) and a loosening of credit criteria should additionally support consumption spend going forward.


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