Annual mining production in January shows best rise in two years
The largest positive contribution to the annual increase was led by iron ore, followed by PGMs and then coal
Mining production beat market expectations, rising sharply in January and recording the largest increase in more than two years.
Mining production increased 7.5% year on year, data released by Stats SA on Thursday showed. This was well above the Bloomberg consensus of seven economists, who had forecast an increase of 1%, and the largest increase since November 2017.
The increase was off a downwardly revised 0.1% in December.
The largest positive contribution to the annual increase was led by iron ore, which rose 27.9%, followed by platinum group metals (PGMs), which rose 10.2% and coal, which rose 2.3%, according to Stats SA.
Seasonally adjusted figures showed mining production rose 6% month on month, also off a downwardly revised -5.2% in December.
January’s mining figures are among the first to give an indication of how the economy could perform in the first quarter of 2020, given the souring global conditions due to the spread of the coronavirus.
The disease has sparked turmoil in global markets, resulting in multilateral agencies such as the OECD cutting global growth expectations, as well as expectations for China’s growth. The Asian giant is the epicentre of the pandemic and a key consumer of SA commodities.
At the same time SA is grappling with domestic problems notably power cuts by Eskom, which intensified this week, requiring that 4,000MW be cut from the grid.
The mining figures coincided with the release of the SA Chamber of Commerce and Industry’s (Sacci’s) trade conditions survey, which showed that trading conditions among wholesale trade, retail trade, hotels and restaurants slid in February.
The survey — which includes both the Sacci trade activity index (TAI), as well as the trade expectations index (TEI) — revealed that trade conditions deteriorated in February, with 60% of the respondents being in negative territory compared to 57% in January.
Both indices range between 0 and 100, with 50 as their neutral mark — anything lower than 50 is deemed to be a negative reading
Meanwhile only 45% of respondents see conditions improving over the next six months, Sacci said in a statement on Thursday.