South Africa Mining Output Falls to 19-month Low as Platinum Weighs
Thu Sep 11, 2014 11:04am GMT
JOHANNESBURG (Reuters) - South Africa's mining output fell more than expected in July, hitting levels last seen in late 2012 and compounding doubt about whether the central bank would hike interest rates next week as the economy suffers.
Mining output in Africa's most advanced economy dropped 7.7 percent year-on-year in July, from a revised 5.4 percent decline in June, Statistics South Africa said, with output largely hit by platinum group metals, which fell more than 45 percent.
Economists polled by Reuters had expected mining output to contract 6.35 percent.
The data increases concerns about the health of the economy, which is still struggling to recover from the effect of a five-month strike in the platinum industry this year. The number comes just days after the release of a wider-than-expected current account deficit for the second quarter.
"Where oh where is the growth in South Africa? Despite the end of the (platinum) strike, output is still deeply negative year-on-year, including in July," said Razia Khan, head of Africa research at Standard Chartered.
"So after a pretty disastrous Q1 and Q2 contribution to GDP, mining's contribution to GDP growth in Q3 is not looking especially good."
Earlier this year the Association of Mineworkers and Construction Union (AMCU) downed tools for higher wages at the world's top three platinum producers - Implala platinum, Anglo American Platinum and Lonmin - in the longest strike in South African history.
The mining sector entered recession in the second quarter of 2014 and helped to drag the whole economy into contraction in the first three months of the year.
GDP managed a 0.6 percent expansion in the second quarter, effectively putting growth at zero in the first half of the year.
The Reserve Bank will meet to decide on monetary policy next week, and although the bank has announced a tightening cycle to try and stem high inflation, poor growth indicators could cause it to pause on hiking until next year, economists said.
The rand weakened after the data and was trading at 10.9530 to the dollar at 1010 GMT, down over 0.2 percent on its previous close.
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| South African mineworkers at Harmony Gold during Oct. 2012. |
JOHANNESBURG (Reuters) - South Africa's mining output fell more than expected in July, hitting levels last seen in late 2012 and compounding doubt about whether the central bank would hike interest rates next week as the economy suffers.
Mining output in Africa's most advanced economy dropped 7.7 percent year-on-year in July, from a revised 5.4 percent decline in June, Statistics South Africa said, with output largely hit by platinum group metals, which fell more than 45 percent.
Economists polled by Reuters had expected mining output to contract 6.35 percent.
The data increases concerns about the health of the economy, which is still struggling to recover from the effect of a five-month strike in the platinum industry this year. The number comes just days after the release of a wider-than-expected current account deficit for the second quarter.
"Where oh where is the growth in South Africa? Despite the end of the (platinum) strike, output is still deeply negative year-on-year, including in July," said Razia Khan, head of Africa research at Standard Chartered.
"So after a pretty disastrous Q1 and Q2 contribution to GDP, mining's contribution to GDP growth in Q3 is not looking especially good."
Earlier this year the Association of Mineworkers and Construction Union (AMCU) downed tools for higher wages at the world's top three platinum producers - Implala platinum, Anglo American Platinum and Lonmin - in the longest strike in South African history.
The mining sector entered recession in the second quarter of 2014 and helped to drag the whole economy into contraction in the first three months of the year.
GDP managed a 0.6 percent expansion in the second quarter, effectively putting growth at zero in the first half of the year.
The Reserve Bank will meet to decide on monetary policy next week, and although the bank has announced a tightening cycle to try and stem high inflation, poor growth indicators could cause it to pause on hiking until next year, economists said.
The rand weakened after the data and was trading at 10.9530 to the dollar at 1010 GMT, down over 0.2 percent on its previous close.
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