Mining production upbeat, but retail sales muted
Mining production volumes remained upbeat in the fourth quarter, with the November mining production numbers better than expected.
However, port congestion and persistent load shedding are undermining South Africa’s mining industry, with annual mining production for 2023 down 0.6% following a contraction of 7.2% in 2022, according to Statistics SA’s data for November.
Seasonally adjusted mining production increased by 2.1% compared to October after a 2.0% increase in October compared to September. Annual output increased 6.8%, following the previous month’s 3.6% expansion compared to a year ago.
The November out-turn exceeded expectations and the largest positive contributors to the year-on-year increase were platinum group minerals (PGMs) that increased 15.2% and contributed 3.9 percentage points, coal that increased 10.6% and contributed 2.5 percentage points and iron ore that increased 20.1% and contributed 2.1 percentage points.
Seasonally adjusted mining production increased by 2.1% in the three months ending in November compared to the preceding three months, driven by increased coal (+4.6%) and PGMs (+4.6%) output.
Jee-A van der Linde, senior economist at Oxford Economics Africa, said: “SA’s industrial sector experienced a weak third quarter, declining by 1.1%, but it is looking better for the fourth quarter with back-to-back increases in mining production volumes.
“Still, this may be short-lived, as current industry fundamentals are not conducive to sustaining an expansion in production.”
Port congestion and load shedding worsened considerably in recent months, with a key coal export line to Richards Bay shut and export activity mostly suspended after two coal freight trains collided in mid-January.
The economy enters 2024 with little economic momentum and real GDP growth is expected to pick up only modestly to reach 0.7% this year. Supply-side constraints will continue to undermine growth in 2024, he said.
Consumers kept spending to a minimum in November. According to Statistics SA, retail sales increased by 0.4% compared to October, but decreased by 0.9% from a year ago. Seasonally adjusted retail trade sales increased by 0.4% compared to October. On an annual basis, sales dropped 0.9%.
Seasonally adjusted retail trade sales dropped 0.5% in the three months ending in November compared to the preceding three months.
However, glimpses of Black Friday shopping were apparent in November, with household furniture and appliances up 3.1% compared to October, together with all other retailers (+5.6% month-on-month) and general dealers (+1.8% month-on-month). But buying activity was subdued overall.