Business Maverick


South Africa’s September mining, manufacturing output figures probably seal case for third-quarter GDP contraction

South Africa’s September mining, manufacturing output figures probably seal case for third-quarter GDP contraction
A worker wearing a protective mask on the production line at the Nampak Bevcan Springs manufacturing plant in Springs, South Africa, on Thursday, 13 August 2020. (Photo: Waldo Swiegers / Bloomberg via Getty Images)

South African mining production fell in September, while manufacturing maintained a rebound from July’s riot-induced meltdown. It all points to a widely expected contraction in the quarter to the end of September and, with the onslaught of load shedding this quarter, hardly paints a picture of decent economic growth.

Mining production in the year to September fell 3.4%, while on a monthly basis it decreased 3.7%, Statistics South Africa said on Thursday. This meant that over the course of the quarter, mining output was down 0.6% compared with the previous quarter – so one of the drivers of economic growth will be a drag on the economy’s overall performance for the period. 

Mineral sales – which have been shooting the lights out on the back of surging commodity prices – also faltered, which is significant and concerning as the sector’s rising tax contribution has been one of the few things holding the fiscal ship of state afloat. Finance Minister Enoch Godongwana pointedly noted in his Medium-Term Budget Policy Statement on Thursday that the mining windfall was already softening. 

Minerals sales fell 1.1% on a yearly basis and a whopping 24.6% compared with the previous month as the commodity boom has, with some notable exceptions, cooled. There are also logistical snags stemming from a shoddy rail network which is preventing products from getting to market. 

On the manufacturing side of the economy, output rose 1.3% year on year in September. On a monthly basis, production in the sector rose 3.8%. But because of the mayhem that rocked KZN and Gauteng in July, manufacturing output for the quarter dropped 3.9% compared with the second quarter. 

This probably seals the case for a contraction in the third quarter and, with the load shedding onslaught that has been unleashed this quarter, the Treasury’s growth forecast for the year of 5.1% looks on the high side. Do not be surprised if it falls short. DM/BM

[hearken id=”daily-maverick/8851″]


Comments - Please in order to comment.

Please peer review 3 community comments before your comment can be posted