Two big boosts for South Africa’s economy

 ·11 Apr 2024

Mining and manufacturing in South Africa have seen significant increases in sales.

According to Stats SA, mining production increased by 9.9% year-on-year in February after a revised 2.8% drop in January.

The largest positive contributors were:

  • iron ore (42.9% and contributing 5.1 percentage points);
  • coal (14.6% and contributing 3.7 percentage points);
  • Chromium ore (20.6% and contributing 1.0 percentage point).

Investec economist Lara Hodes said that sentiment in the global manufacturing industry has strengthened, driving a need for industrial metals.

This was supported by positive movements in S&P Global’s seasonally adjusted Global Steel Users Purchasing Managers’ Index, which was in expansionary territory in February (above 50).

“Domestically, although improvements have been made in a number of areas, the mining sector continues to face key challenges, including significant water infrastructure challenges and the poor state of our roads and railways, which continues to impede optimal activity and export potential,” said Hodes.

“Lastly, policy uncertainty remains a key hindrance, weighing on the country’s competitive position and detracting much needed foreign investment.”

Manufacturing also up

Like the rest of the world, manufacturing in South Africa also rose in February, increasing by 4.1% year-on-year in February 2024.

The biggest positive contributions were made by the following divisions:

  • Wood and wood products, paper, publishing and printing (14.9% and contributing 1.5 percentage points);
  • Food and beverages (5.8% and contributing 1.3 percentage points); and
  • Petroleum, chemical products, rubber and plastic products (4.7% and contributing 1.0 percentage point).

Like the mining data, seasonally adjusted manufacturing data still dropped on a monthly basis, declining by 0.3% in Februray 2024.

Seasonally adjusted manufacturing production was also flat in the three months ended February 2024 compared to the prior three months.

According to FNB Economics, despite the persistent challenges, the manufacturing sector has shown “remarkable resilience”.

Indications are that manufacturers expect operating business conditions to improve over the near term, it said, while “the pace of growth should be consistent with weak domestic and external demand as well as ongoing structural constraints”.

Read: Another 4,000 jobs on the line in South Africa

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