Mining slows, but factories lift outputComment on this story
Johannesburg - Production and sales growth for mining slowed sharply in January while figures in the manufacturing sector beat market expectations, according to data released by Statistics SA yesterday.
Manufacturing production volumes grew 2.5 percent year on year in January compared with 2.8 percent growth in December, and came in higher than the expected growth of 1.9 percent.
About 30 out of 40 manufacturing industrial categories recorded positive month-on-month growth, with food, petroleum and basic iron and steel sub-sectors making the biggest contribution in January.
Manufacturing is expected to grow this year on the back of a weaker rand/dollar exchange rate and the recovery of the global economy.
Some analysts expect the eight-week strike in the platinum belt, the threat of load shedding, and upcoming elections will have an impact on growth prospects in the manufacturing sector.
Mining volumes were poor, with year-on-year growth slowing to 3.1 percent in January from 12.2 percent in December. Volumes had grown 5.2 percent in November and 23.2 percent in October. On a month-on-month seasonally adjusted basis, mining production declined by 1.1 percent in January compared with a 6.9 percent expansion last January.
Kamilla Kaplan, an Investec economist, said yesterday that judging by the figures, the mining industry’s contribution to gross domestic product (GDP) was likely to drop.
Gold production declined by 6.3 percent year on year in January after advancing 12.3 percent in December.
Iron ore, chrome, and diamonds declined month on month in January, and platinum group metals output fell 3.7 percent in the month, the biggest contributor to the fall.
“PGMs (platinum group metals) production in turn, comprises nearly a quarter of total mining production and the impact to date has been significant,” Kaplan said.
About 70 000 members of the Association of Mineworkers and Construction Union in the platinum belt have been on a wage strike since January 23.
“One can presumably attribute this largely to the fact that the strike in the platinum industry, which is still on the go, began in the last week of January,” Azar Jammine, an economist at Econometrix, said yesterday.
The 18 percent decline in the rand/dollar exchange rate was overshadowed by the negative impact on the country’s trade figures as a result of lower production of minerals.
Jammine said the full impact of the strike had not yet been felt as platinum companies had been able to sell stock that they had accumulated.
“By all accounts, this inventory has been depleted. Their cash flows are likely to begin suffering badly from now onwards.”
As a result of the strike, analysts have revised their economic growth outlook this year, with some expecting growth rates of below 2 percent.
The sector has been volatile since 44 people were killed in Marikana in August 2012, and sales and production statistics have been on a downward trend. To date, about 500 000 ounces of platinum have been lost, amounting to R8.1 billion, or 0.24 percent of gross domestic product, since the strike started on January 23.