Pretoria, South Africa — 12 November 2012 – Mining and manufacturing production in South Africa both fell during September, reflecting both the effects of widespread labour unrest in the country and weaker global demand for domestic exports.
BDlive reports that the two sectors combined account for a fifth of economic output, and that
the problems they face will curb job creation and the economy’s pace of growth.
Mining output contracted 8% during September, while manufacturing activity shrank 2.3%, according to the latest figures released by Statistics South Africa.
Compared with the same month last year, mining declined 8.3% and manufacturing 1.1%.
There is little to suggest that there will be much relief for either sector in the months ahead.
“The outlook is fairly bleak in the sense that both manufacturing and mining face massive cost increases from labour, electricity and other administered prices,” Pan African Investment and Research MD Iraj Abedian said.
“The cumulative effect of these fairly substantial increases happening in a globally unfavourable environment is going to have adverse effects on output and prospects,” he added.
A fall in mining output had been widely expected due to the strikes which paralysed much of the sector in September, but the severity of the contraction was a surprise.
Production of platinum group metals plummeted 17.8% year on year; gold dived 11.1%; and copper fell by a huge 60.2%.
Minerals account for more than 40% of South Africa’s exports, so if output continues to wane, the already enormous trade deficit will continue to widen. This could force the rand to weaken and fan inflation.
Analysts said the poor performance of the mining sector was likely to subtract about half a percentage point from South Africa’s pace of growth during the third quarter of this year.
Source: BDlive. For more information, click here.