Tuesday 3 September, was not exactly early Christmas, but Statistics South Africa (StatsSA) unwrapped a pleasant surprise. In Q2 the economy rebounded strongly, growing 3.1% against expectations of a 2.4% expansion which was forecast by a Reuters poll. This followed a brutal 3.1% contraction in Q1, triggered in part by excessive load shedding.

This rare piece of good economic news comes against the backdrop of an unemployment rate of 29%, violent xenophobic riots, mounting government debt levels and glaring income disparities which are probably widening. So no one is breaking out the bubbly.

“It’s a non-event. Mining boosted the numbers massively. Q3 will offer some mild growth, but the growth rate we had in Q2 won’t be sustained,” George Glynos, head of research and analytics at ETM Analytics, told Business Maverick.

Mining had a big rebound after slumping in Q1, partly because of that quarter’s wave of rolling power cuts.

“Mining was the strongest performer in the second quarter, expanding by 14.4%. This was the industry’s strongest showing in three years since the second quarter of 2016 when production jumped by 16.3%,” StatsSA said. Iron ore was the main driver here while gold maintained its inexorable decline, contracting by 4.1%.

Finance, real estate and business services had brisk growth of 4.1%, while trade sales and manufacturing rose. But agricultural output fell by 4.2% while the construction industry remained mired in recession, shrinking by 1.6%, its fourth straight quarterly contraction. These trends are very worrying as both sectors are labour-intensive and have the potential to create desperately-needed jobs. Sectors that are growing, such as banking, are unlikely to create huge numbers of jobs.

“While the worst of the load shedding now seems to be behind South Africa, the global backdrop may yet prove to be a hurdle to a full-blown recovery,” said Razia Khan, Standard Chartered Bank’s chief economist for Africa and the Middle East.

There is plenty of evidence that the recovery is fragile at best. South Africa’s trade balance sank unexpectedly into deficit in July, while the August Absa Purchasing Managers’ Index (PMI) highlighted low confidence levels.

Meanwhile, the latest wave of xenophobic violence to rock Johannesburg underscored how unemployment and poverty are helping to fan the flames of social unrest and discontent. Growth for 2019 is likely to be anaemic at best, which will do little to resolve the challenges of joblessness, poverty and inequality that still disfigure South Africa. BM