Mining surge gives SA economy a major push
THE embattled economy today received welcome relief after mining production in June surged 5 percent month-on-month despite a plunge in gold production in the period.
June’s print was also better than the 2 percent increase economists expected.
The troubled gold sector which is in the middle of protracted wage negotiations tanked 19.2 percent, extending its weakness.
On a yearly basis, the mining sector saw a rebound in output, registering a 2.8 percent in at the end of the second quarter, against a 1.8 percent drop in May.
There were fears that the country was racing towards recession after the manufacturing data for the second quarter came poor last week.
The chief economist at Investec Annabel Bishop last said the mining activity data would need to come in strong for the economy to avoid a debilitating recession.
“For industrial production figures to avoid a recession in the second quarter and so not pull GDP growth down, mining production would need to record growth of at least 4 percent month on month, seasonally adjusted for June,” Bishop said.
The country’s economy shrunk to its worst in nine years in the first quarter.
The mining sector contracted 9.9 percent during the quarter, extending the 4.4 percent drop in the fourth quarter, mainly due to lower production of gold, platinum group metals and iron ore.
Manufacturing decreased 6.4 percent, the biggest drop since the second quarter of 2015, and reversing from a 4.3 percent gain in the last quarter.