SA economic growth 'lacklustre': Reserve Bank

08 December 2011 - 13:44 By Sapa

The South African economy continued to expand in the third quarter of 2011 but at a "lacklustre" pace, the SA Reserve Bank said in its quarterly bulletin on Thursday.

It said third-quarter production was held back by industrial action which especially made itself felt in the mining and manufacturing sectors.

"Real value added by the mining sector contracted in the quarter under review as strike activity added to the impact of work stoppages related to accidents, logistical problems and plant maintenance.

"Agricultural output also declined as crops, while large, did not match the bumper crops harvested in the previous year," the bank said.

In the manufacturing sector, industrial action in several subsectors, fragile global demand and strong international competition were reflected in a mild contraction in production in the third quarter of 2011.

This spilled over to the electricity sector, where real value added declined somewhat, amplified by significantly higher electricity tariffs.

The construction sector experienced a modest increase in real output as civil construction activity expanded, countering weak demand for new residential and non-residential buildings.

The tertiary sectors maintained robust growth in the third quarter, led by the trade sector, where retail and motor trade activity performed well.

Increased activity in the equity, bond and other financial markets simultaneously bolstered growth in real value added by the finance sector, although conditions in the banking subsector remained subdued.

Domestic expenditure gained momentum in the third quarter, led by fixed capital formation and final consumption expenditure by households.

Households continued to raise their real final consumption expenditure at a rate tuned to the growth in their real disposable income, allowing the ratio of debt to disposable income to inch lower.

Growth in household expenditure on durable goods was particularly strong in the third quarter of 2011, as spending on new motor vehicles and on recreational and entertainment goods surged.

Albeit from a low base set in 2009, real fixed capital expenditure accelerated further to reach a brisk rate of growth of 5.6% in the third quarter of 2011.

All three main institutional sectors recorded a faster pace of increase in real capital outlays over the period.