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The SA Daily 11 February 2020

Manufacturing and mining in poor shape

Shireen Darmalingam

  • It’s a busy week as far as data releases are concerned this week. Manufacturing production data for December is due today. Manufacturing output is expected to have contracted further by 3.9% y/y, after contracting by 3.6% y/y in November. In the three months ending November, production growth flatlined at 0%. The sector, which accounts for over 12% of GDP, is therefore unlikely to have contributed much to GDP growth in Q4:19. The inherent risk in inadequate and uncertain electricity supply to the sector will likely keep growth in the sector constrained this year.
  • Mining production growth for December scheduled for release on Thursday should also reflect declining output. Bloomberg consensus foresees a further decline by 3.5% y/y, after November’s decline of 3.1% y/y. Similarly, in the three months to December, mining output growth contracted by 0.9% q/q compared to the 1.4% q/q decline in the three months to October. (The SA mining sector accounts for 7.2% of GDP.) The outlook for the mining sector remains dire in the context of weak global demand, China’s slowdown and domestically high production costs as well as continued electricity supply disruption.
  • Both the manufacturing and mining sector subtracted from overall GDP growth in Q3:19 by a cumulative 1 percentage point.

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