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"Although commodity prices remain supportive, there are indications of a slowdown in global demand. The strength of the rand, which hampers export competitiveness, as well as transport and energy capacity are also hurting the sector," Isaac Matshego and Dennis Dykes, from the group's economic unit, said in a note on the latest mining production data released by Statistics SA.

"The threat of labour strikes, with labour unions having declared disputes with some mining houses, does not bode well for activity in the coming months," they said, adding that some moderation in mining output could be experienced during the second half of the year, due to a high base established in 2010 and some loss in growth momentum internationally.

According to Statistics SA, growth in mining production slowed to 9.6% year on year (y/y) in May from 12.0% y/y in April.

Gold output fell by 5.8 % y/y and was down by a seasonally adjusted 3.6% month on month (m/m), while non-gold output was dragged down by declines in platinum group metals, which declined 9.9% m/m, and coal, which was 6.3% lower m/m.

Growth in the value of mineral sales eased to 16.0% y/y in April from 33.3% y/y in March.

"These numbers, combined with manufacturing data released earlier this week, indicate weak production activity in the economy," said Matshego and Dykes.

Released on Tuesday, manufacturing production showed a 0.6% y/y increase in May after a revised 0.2% growth in April.

Statistics SA said the increase was driven mainly by higher production in the basic iron and steel, non-ferrous metal products, metal products and machinery division.

"These, against the backdrop of recent data suggesting that consumer demand remains moderate, support the view that the SA Reserve Bank will be reluctant to hike interest rates unless there is evidence of second-round inflation. We therefore maintain our view that the first hike in interest rates will come only in early 2012," said the Nedbank economists.

Similarly to the manufacturing sector, the latest mining production figures continue to highlight that when mining production is looked at in level terms, it remains about 10% below its pre-recessionary peak and, therefore, continues to reveal the still largely uneven nature of the recovery in SA.

Absa Capital said: "This is key to the reasoning behind our belief that interest rates are unlikely to be raised this year."

Economists at Standard Bank also believe that the SA Reserve Bank is likely to keep its accommodative monetary policy stance until the first quarter of next year.

And, like Nedbank and Absa Capital, Standard Bank warned of the severe impact prolonged industrial action could have on the mining sector.

The National Union of Mineworkers (NUM) this week threatened industry-wide industrial action after talks in the platinum, gold and coal sectors deadlocked.

Absa Capital said in a note to clients that the risks to second-half mining production owing to strike action in a number of key industries should not be discounted, particularly given the effect industrial action had on the mining industry in the second quarter of last year, when mining activity slumped 22.2% quarter on quarter on a seasonally adjusted annual rate.

Absa Capital said: "In our view, the extent to which this will negatively affect the industry will depend largely on how quickly the wage disputes between employers and unions within these industries are resolved, which, given the large wage gap that exists in many industries, could drag on for some time."

But, despite the setback in the May production figures, with a moderation seen in the momentum growth in mining activity, Absa Capital still believed that the sector would still be able to contribute positively to GDP growth in the coming quarters, as high global commodity prices remain supportive of further growth in production over the medium term.