Mining output up 3.4% last month

Mining production grew 3.4% last month compared with a year earlier, in line with expectations for a rebound in the sector and offering some positive news for third-quarter economic growth.

The rise broke a run of 12months of contraction in the sector, which has been under pressure from a long period of low global economic growth and prices.

Yesterday’s data from Statistics SA ends the sector’s releases for the third quarter. Output for the quarter was up 1.5% compared with the previous quarter.

A resurgence in manufacturing and mining output drove a big turn around in real GDP growth to 3.3% quarter on quarter, from a shock 1.2% contraction in the first quarter.

The long run of contractions mean the sector’s output for the year to end last month is still 5.7% weaker than the same period last year – though this is an improvement on a 6.8% decline in the year to August.

Investec economist Kamilla Kaplan said a multitude of factors were attributed to the sector’s underperformance, from increased operating costs to weaker commodity demand from China and low commodity prices.

“Commodity prices are expected to stabilise, but remain suppressed ,” Kaplan said.