The SA Daily
10 September 2020
Mining and manufacturing
Shireen Darmalingam
- The Stats SA mining and manufacturing output data is due out today. Mining production for July is expected to have contracted by 19.8% y/y, after having contracted by 28.2% y/y in June. On a m/m basis, June output contracted by 1.4% m/m; expectations are for an increase of 1.1% m/m in July. Mining sector growth plunged by 73.1% q/q in Q2:20, after contracting by 21.5% q/q in Q1:20. This sector subtracted 6.0 percentage points from GDP growth in Q2:20. The June decline continued even as companies resumed operations at full capacity. However, staff from neighbouring countries could return only from 7 July. Mining continues to suffer amid the pandemic and longstanding domestic constraints such as poor power supply as well as high electricity costs and water tariffs.
- Manufacturing output is expected to have declined by 13.8% y/y in July, from a 16.3% y/y decline in June, as many parts of the economy re-opened in May and June after stringent lockdown restrictions in April. Production is expected to moderate to 3.8% m/m in July, from an increase of 16.8% m/m in June. Nonetheless, all manufacturing categories remained in contraction. Manufacturing sector growth slid sharply in Q2:20, by 74.9% q/q; this follows a contraction of 8.5% q/q in Q1.
- Both mining and manufacturing production will remain impeded by the persistent electricity shortfall and uncertain future security of electricity supply, and by relentless hikes in electricity tariffs.
- Near- to medium-term manufacturing activity remains deeply constrained. Even recovering to pre-pandemic levels will take a long time – but growth prospects for Q3:20 are nonetheless somewhat more promising.
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