Mining production suffers surprise contraction in August
Stats SA says platinum group metals led the decline, contributing three percentage points to the headline figure
SA’s mining sector suffered a surprise 3.2% contraction in August, suggesting the economy struggled to gain momentum in the third quarter of 2019.
Economists polled by Bloomberg expected production to remain unchanged in the sector, which accounts for about 8% of GDP, and was a key contributor to growth in the second quarter.
Platinum group metals (PGMs) led the decline, Stats SA said on Thursday, falling 12.5% year on year, and contributing three percentage points to the headline figure.
Diamond production fell 29.8%, adding 1.4 percentage points to the decline. Manganese production jumped 34.3% year on year, offsetting the fall by 1.8 percentage points.
Investec economist Kamilla Kaplan had expected a contraction in the sector, citing weak domestic demand and international uncertainty.
“Underlying output activity is constrained by a persistently uncertain policy environment, an escalation in operating costs and periods of labour unrest,” Kaplan said ahead of the release.
“The sector also faces an increasingly challenging global environment as slower growth, particularly in China and the US, would dampen the global demand for commodities,” she said.