Future of mining and manufacturing remains uncertain despite slight rebound
Stats SA figures at start of fourth quarter were better than expected, but are still short of arresting bleeding unemployment
As mining and manufacturing kicked off the fourth quarter with stronger-than-expected growth, data from Statistics SA showed that both sectors bled jobs in the third quarter.
Economists warned that the rebound in growth is insufficient to create enough jobs to reduce unemployment and poverty.
The number of employed South Africans fell by 16,000 in the third quarter of 2018. The manufacturing sector had job losses of 7,000, while mining recorded 2,000 losses, the quarterly employment survey showed on Tuesday.
“The recession may technically have ended, but it does not feel that way for job seekers,” said NKC analyst Gerrit van Rooyen.
While the production figures released on the same day were upbeat and exceeded expectations, signalling that the economy remained strong at the start of the fourth quarter, the future of both sectors remains uncertain.
In particular, intermittent load-shedding in recent weeks and ongoing concerns regarding US import tariffs on the steel and aluminium sectors will likely put pressure on production numbers during the remainder of 2018, warn economists.
“Given recent rate hikes and depressed sentiment, we doubt that the economy will be able to maintain this momentum over the quarter as a whole,” said Capital Economics economist John Ashbourne.
This is still not a major boom and both sectors remain volatile, economist Mike Schüssler said. “The job losses will continue,” he said.
The mining sector has recovered somewhat in October, though most sub-sectors still reported lower production compared to a year earlier.
The country is estimated to have the world’s fifth largest mining sector in terms of economic value. In 2017, mining contributed 8% to SA’s GDP. Three months of declining mining production was halted in October, with a surprise annual growth of 0.5%.
However, the sector remains constrained by unprofitable mines and labour strikes. Gold output, in particular, contracted for a 13th consecutive month in October, the longest streak of declines in six years.
In October, parliament’s portfolio committee on mineral resources warned that the mining industry faces a bleak future. In its report to parliament, the committee said further job losses continue to be a threat.
Manufacturing grew by 3% in October's after remaining flat at 0.1% in September. In 2017, the sector made up 13% of GDP. But employment in the sector has seen a three-decade decline with figures comparable to 1972, before the boom in the eighties.
“We won’t see more jobs unless these sectors grow more,” said Schüssler.
Positive economic data only allowed a small recovery from the rand’s 21c fall on Monday, with the local currency immediately gaining about 4c against the dollar — or 0.3% — after manufacturing data was released.
After earlier extending its gains, in afternoon trade the rand was flat against the dollar at R14.3753, but 0.22% firmer against the euro at R16.3016.