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The SA Daily 08 August 2019

Some SA sectoral impacts

  • Mining output is expected at 0.4% m/m for June, rebounding from -1.5% m/m in May; manufacturing output is expected at just 0.5% m/m, after a robust 3.0% m/m in May. We’d therefore expect some growth rebound for 2Q19 off the very low 1Q base.
  • In 1Q19, mining and manufacturing constrained GDP growth; mining declined 10.8% q/q (seasonally adjusted and annualised), a third quarter of contraction, and manufacturing fell 8.8% q/q due to the widespread power cuts in 1Q by Eskom that had already begun in December 2018.
  • SA’s primary and secondary sectors have been underperforming SA’s services sectors that have been managing to prop up both economic growth and employment. Employment in the services sectors was 274,000 higher in 2Q19 than 2Q18; however, employment in the primary and secondary sectors fell by 132,000 in that time.
  • The persistently poor growth in SA’s primary and secondary sectors can be ascribed to unstable power supply; higher electricity, water, port and rail costs; policy uncertainty; and poor domestic demand. These sectors employ about 4.5m, including both semi-skilled and unskilled. Sustained weakness here therefore restricts both economic growth and jobs as well as the revenue base and fiscus which already are under strain. It could even eventually restrict the services sectors, should SA’s urgently needed political and policy reforms neither improve competitiveness nor attract investment.

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