Last week, the US non-farm payrolls (NFP) for October significantly undershot expectations, coming in lower than expected at 12 000. Last week’s data marks the weakest jobs report in the Biden Administration. Locally, Finance Minister Enoch Godongwana delivered the Medium-Term Budget Policy Statement (MTBPS) for 2024, painting a cautious picture of growth.
International Market Developments
Last week’s US non-farm payrolls (NFP) for October significantly undershot expectations, coming in lower than expected at 12 000, from a downwardly revised increase of 223 000 (previously 254 000) in September. Employment was hit by severe hurricanes and major strike activity in October. Average hourly earnings came in at 0.4% month-on-month in October, from an increase of 0.3% month-on-month in September. The unemployment rate remained steady at 4.1% in October. The softening labour market supports the case for the Fed to cut the Fed funds rate further when it meets later this week. Last week’s data marks the weakest jobs report in the Biden Administration and comes just a few days before Americans go to the polls this week.
Looking ahead, US voters head to the polls to decide on the 47th President of the United States and the make-up of Congress on Tuesday November 5th.
The Federal Open Market Committee (FOMC) will gather to decide on monetary policy on November 7th. The FOMC is largely expected to cut rates by 25 basis points to 4,50% – 4,75% at this week’s meeting.
Local Market Developments
Last week, Finance Minister Enoch Godongwana tabled the 2024 Medium-term Budget Policy Statement (MTBPS). In his statement the minister highlighted a cautious growth outlook for South Africa (1.1% in 2024, 1.7% for 2025–2027) amidst global challenges. The budget focused on stabilizing debt, with a target of 75.5% of GDP by FY2025/26, and prioritizing infrastructure and structural reforms to drive growth. The four key strategies are: macroeconomic stability, structural reforms, infrastructure enhancement, and strengthening state capacity. Revenue shortfalls and increased expenditures present challenges, with a projected R6.05 trillion of debt by 2025/26. The budget also supports local governance, especially municipal debt relief related to Eskom, and prepares South Africa for its 2025 G20 presidency under a theme of solidarity and sustainable development.
Looking ahead, it is a data-thin week on the local front. Investors’ attention will be focused on the US election outcome and the FOMC monetary policy decision. Investors are expecting volatility in the markets due to these two events.