JOHANNESBURG – Industrial and mining output data came way below consensus, figures released on Thursday showed, signalling a bad start for the second half of the year with business confidence at its lowest in more than three decades.
Statistics South Africa said industrial output fell for a third consecutive month, dropping by 1.4 percent year-on-year in July, way below consensus of a 0.35 percent contraction.
Mining output rose 0.9 percent year-on-year, lagging the consensus of a 2.8 percent increase.
“The figures were worse than expected for both manufacturing and mining, which signals a bad start to the second half of 2017,” said Elize Kruger an analyst NKC African Economics.
Mining and manufacturing together make up 20 percent of the economy, but the two sectors have struggled in the last decade.
Africa’s most industrialised economy bounced back from recession, data showed earlier this week, but the latest manufacturing data painted a bleak picture.
The country is beset by low growth the fallout from credit downgrades by S&P Global Ratings and Fitch and in-fighting in the ruling African National Congress (ANC).
The ANC is due to hold elections in December to replace President Jacob Zuma as its leader, and several factions are jostling for power. Zuma tenure as South Africa’s president ends in 2019.
On Wednesday, the South African Chamber of Commerce and Industry’s monthly business confidence index fell to 89.6 in August, the lowest level since mid-1980s, from 95.3 in July.
“Until we get a clear political and policy environment its difficult to imagine we’ll see confidence or the economy as a whole coming back strongly,” said chief economist at Nedbank Dennis Dykes.
In July the central bank halved its growth forecast for 2017 to 0.5 percent and cut lending rates for the first time in five years in bid to stimulate growth.