The production figures for mining were a mixed bag, according to the data released on Thursday by Statistics South Africa (Stats SA). On an annual basis, production fell by 4.5% in September, maintaining a long-term downward trajectory. This was the sector’s eighth consecutive month of annual decline.  

But the monthly and quarterly numbers are marginally better. In September, mining production eked out a 0.1% rise, translating into a 2.2% increase in Q3 from Q2. That means it will make a small positive contribution to the Q3 GDP figure due for release in December.  

Manufacturing was the surprise performer, suggesting that the sector may be finding inventive ways to deal with the curse of rolling blackouts, which were especially intense in September. On a year-on-year basis, production was 2.9% higher than in September 2021, completely overshooting the Bloomberg consensus forecast of a 2.4% contraction. Compared with August, it shot up by 4.9%, while on a quarterly and seasonally adjusted basis it rose 1.9%. 

“This means that the manufacturing sector contributed marginally to Q3 GDP growth,” FNB senior economist Thanda Sithole said in a note on the data.  

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The manufacturing read does not quite jive with the Absa Purchasing Managers’ Index for September, which declined to 48.2 from 52.1 in August — one of the reasons there were expectations of a contraction in the month.  

So, this certainly counts as a pleasant surprise, but it remains to be seen if the economy has managed to dodge a recession. Retail trade sales for the month due next week will help to complete the picture, and they have been on a monthly and quarterly decline in July and August, with annual increases explained by base effects.  

This is hardly surprising in the face of high inflation and rising interest rates, among other factors. South African consumers are not exactly liquid at the moment, and September spending may spell the difference between a recession and a sluggish rebound.  

“I’m quite surprised by the mining and manufacturing numbers, to be honest. So, our baseline for a shallow recession in Q3 seems less plausible at the moment, albeit probable,” Jee-A van der Linde, senior economist at Oxford Economics Africa, told Business Maverick. Van der Linde noted that much will hinge on the retail data next week.  

Stay tuned for that. DM/BM