Mining sector picks up in July‚ but forecast looking bleaker

After a slight slump in June‚ the mining sector picked up slightly in July‚ but the numbers were lower than expected.

Mining production increased 0.9% from a year earlier in July‚ after a 0.8% year-on-year fall in June.

Given that mining production contracted 4.1% in July last year‚ FNB economist Mamello Matikinca had expected production to temporarily lift.

Matikinca warned‚ however‚ that the outlook for the sector in the coming quarters looked weaker‚ given looming strikes and heightened policy uncertainty.

Investec economist Kamilla Kaplan said last week: “Although the magnitude of the rebound in commodity prices seen in the second half of 2016 has faded somewhat‚ commodity prices have broadly remained resilient‚ which should continue lending support to the mining sector.”

Kaplan expected mining to rise by 2% year on year while Trading Economics projected mining output to have risen 1.7% from July last year‚ and 0.2% from June.

Month on month‚ mining production contracted by 0.4% in July.

Seasonally adjusted mining production increased by 0.1% in the three months ended July compared with the previous three months.

The biggest positive contributors to the year-on-year increase were manganese ore (0.9 percentage points); chromium ore (0.7 percentage points); and diamonds (0.7 percentage points).

Gold contributed 0.5 percentage points.