Mixed Local Signals: Vehicle Sales Accelerate, PMI Slips Back

South Africa’s economy started November with mixed signals.
New vehicle sales surged 16% year-on-year in October to nearly 56,000 units, the strongest monthly performance since 2015. The growth was fuelled by lower inflation, a firmer rand, and robust demand from the car rental sector, which accounted for more than one-fifth of all passenger car sales as companies prepared for the festive season.

Exports also climbed, up 0.5% y/y, showing resilience in the face of global supply disruptions. The upbeat figures point to recovering consumer sentiment and stable macro conditions — suggesting South Africa’s automotive sector could end the year on a high.

However, the good news stopped there. The Absa Manufacturing PMI fell back into contraction territory, slipping to 49.2 in October after briefly improving the previous month. Both business activity and new sales orders declined, while the forward-looking “expected business conditions” index hit its lowest level in two years.

The divergence between strong vehicle sales and weak manufacturing sentiment underscores the uneven nature of South Africa’s recovery. Structural bottlenecks, sluggish investment, and policy uncertainty continue to weigh on local industry — despite the GNU’s reform promises and progress through Operation Vulindlela.

Rand Steady Despite Stronger Dollar

The rand held firm near R17.33/$ as the US dollar strengthened to three-month highs, buoyed by investors dialling back expectations for a December Fed rate cut.

Even so, the local currency showed resilience, supported by firm commodity inflows and a risk-on environment in global markets. Gold and platinum prices have boosted South Africa’s trade position, while expectations for both US and domestic rate cuts later in the cycle are improving prospects for consumption and fiscal stability.

The ZAR is expected to remain range-bound between 17.18 and 17.48, with stability in US equity markets key to sustaining emerging-market appetite.
Spot at writing: 17.3375 | Range: 17.1750–17.4800.

Bonds: SARB May Mirror RBA’s Cautious Hold

South African bonds continued to trade with a lower yield bias as investors dial back risk premiums amid growing faith in fiscal reform and the SARB’s credibility. The spread between the R209 and US 10-year yield is now on the verge of breaking below 500 basis points — its narrowest in nearly 15 years.

Globally, the Reserve Bank of Australia held rates at 3.60%, citing sticky inflation near the upper end of its target range. Analysts see parallels with South Africa, where the SARB is expected to hold at 7% on 20 November, balancing inflation concerns around 3.3% against fragile growth.

Market pricing currently reflects at least two 25 bp rate cuts over the next year — a cautiously optimistic signal, assuming the rand remains firm and inflation expectations stay anchored.

Commodities: Oil Pauses, Soybeans Rise

Oil prices slipped slightly after a four-day rally, with Brent crude back near $65 as traders assessed OPEC+’s decision to pause output increases early next year. The group’s first production halt since April reflects concern over a potential oversupply, even as US sanctions on Russian producers and Ukrainian drone attacks on refineries add uncertainty.

Meanwhile, in agriculture, soybean prices climbed after the US and China agreed to suspend retaliatory tariffs and expand purchases under a new trade pact. Beijing committed to importing 12 million tons by year-end and 25 million tons annually for the next three years — a welcome boost for American farmers and global trade optimism.

Metals: Fed Comments Pressure Gold

Gold slipped back below $3,990/oz after several Federal Reserve officials, including Lisa Cook and Mary Daly, voiced reluctance to cut rates again in December. The stronger dollar weighed further on non-yielding assets, while uncertainty over China’s new VAT rules added to caution in the precious metals market.

On the industrial side, Codelco, Chile’s copper giant, announced it expects output to surpass 2024 levels despite recent mine disruptions — easing some supply concerns amid tightening global inventories.

Global Highlights

• Japan: Prime Minister Takaichi urged the Bank of Japan to maintain easy policy, signalling concern over fragile wage growth despite 3% inflation.
• Australia: The RBA’s rate hold underscores sticky service inflation and housing costs that could delay further easing.
• US: The ISM manufacturing PMI fell to 48.7, marking an eighth straight month of contraction, with new orders still weak amid tariff uncertainty.
• UK: The Bank of England is expected to hold rates at 4% on Wednesday, balancing inflation pressures with slowing growth and fiscal uncertainty.