Market Commentary | The week that was
Challenges for hotel sector revenues: South Africa's hospitality sector growth remains sluggish due to slow economic expansion, with May seeing a 16.9% year-on-year revenue increase compared to April's 23.7%.
Inflation and higher interest rates are straining hotel revenue as households divert resources toward necessities. The current hotel income levels are still 1.4% below that of May 2019, with room income down by 11.1%
Groups like Sun International and City Lodge Hotels have reported revenue and occupancy boosts as travel trends rebound, focusing on leisure and business markets to enhance value.
SAA Seeks to Bring Back Former Pilots: South African Airways (SAA) intends to rehire pilots formerly retrenched in 2021, following an agreement with the SAA Pilots Association. The decision comes as SAA expands operations. The airline expressed its interest rather than making immediate offers. Rehiring will be based on seniority, requiring pilots to join within three months of an offer. This initiative follows a similar pilot recall request earlier in March, aimed at increasing SAA's pilot count after prior restructuring.
Zuma's Release Sparks Controversy: President Ramaphosa granted clemency to numerous non-violent convicts, including ex-President Jacob Zuma, who was found guilty of court contempt. Zuma was released from prison swiftly, following a brief re-incarceration of under two hours on Friday. The DA plans to challenge the government's decision, alleging manipulation of power to shield him. Legal experts differ on the move's legality. Zuma's previous imprisonment in 2021 triggered deadly riots. His ties to the Gupta brothers, accused of embezzlement, complicate matters. Zuma faces a separate corruption trial soon. The situation prompts debates on justice, remission policies, and accountability in South Africa.
Markets: The South African rand strengthened more than 1% against the dollar on Thursday, supported by dollar softness before a US inflation report and local mining and manufacturing data. On Friday, the rand traded at R18.86/USD, R20.73/EUR, and R23.92/GBP.
Last week, STATSSA shared mining and manufacturing updates. Mining saw a 1.1% production rise in June 2023, driven by gold. Sales, however, fell 14.3%. Manufacturing excelled, with a 5.5% production boost in June, but sales dipped 0.5% compared to May, following declines in April and May.
Looking at the week ahead: South Africa will release unemployment and retail sales data. The United States will release an update on last month's Fed FOMC minutes and retail sales and housing figures.
