By Thanda Sithole
Total mining production, not seasonally adjusted, contracted by 3.5% y/y in June, following an upwardly revised 1.3% increase (previously 0%) in May. The outturn was worse than the consensus prediction of a 0.8% contraction. Seasonally adjusted output declined by 1.6% m/m, following a subdued 0.1% increase in May. Overall, mining output fell by 0.9% in 2Q24, after a 1.3% decline in 1Q24, confirming that the sector dragged on GDP growth in the reference quarter. This partially clouds our expectation of a GDP rebound in 2Q, following the unexpected decline in 1Q. However, given the relatively smaller contribution of the mining sector to GDP compared to the manufacturing sector, our outlook remains intact at this stage. We will continue to monitor the remaining high-frequency data for June to obtain a clearer picture of how the economy performed in 2Q.
Outlook
Despite the unexpected weakness at the end of 2Q, mining production rose marginally by 0.3% in 1H24 compared to 1H23. This aligns with our view of a moderate recovery in the sector's economic activity. Easing energy constraints and a stable global growth environment should support activity over the medium term. However, despite some improvements in freight rail, persistent inefficiencies in the ports and rail network continue to constrain productivity and profitability in the sector.
Selected sector analysis
The performance of various divisions was mixed, with six divisions posting negative annual growth and the other six posting positive growth. Zoning into the major divisions, which together account for over 85% of total output, negative growth performance was recorded in the following:
