Surprisingly strong growth in mining industry
Mining surprised on the upside in August with exceptionally strong growth‚ indicating that GDP growth may be stronger in the third quarter.
Mining production increased by a significant 6‚9% year-on-year in August after increasing by 0.9% year-on-year in June.
The biggest positive contributors were iron ore‚ which contributed 1.3 percentage points; diamonds which contributed 1.2 percentage points; and gold which contributed 1.1 percentage points.
Seasonally adjusted mining production increased by 5.3% in August compared with July and increased by 1.4% in the three months ended August 2017 compared with the previous three months.
Many economists had been expecting a contraction in the sector.
FNB economist Mamello Matikinca expected a year-on-year contraction for the first time in 2017‚ primarily due to the higher base of August last year.
“The global oversupply of iron ore has pushed the price of the commodity lower‚ and output of the ore‚ which accounts for nearly 15% of mining production‚ should have softened‚” she said.
Investec economist Kamilla Kaplan said last week: “Higher base factors are expected to have suppressed this year’s outcome. However‚ in the year to date to July‚ mining production has risen 4.5% y/y‚ aided by the lift in commodity prices and increased global growth momentum.”
Kaplan expected mining to contract by 2.0% year-on-year while macroeconomics website Trading Economics projected mining output to have risen 0.3% from July last year.