SA growth dips as construction industry fails to pull out of recession

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JOHANNESBURG – The South African economy slipped slightly in the third quarter after rebounding by a revised 3.2 percent in the second quarter of 2019, Statistics SA announced on Tuesday.

The country’s mining, manufacturing and transport sectors were the biggest drags on growth in the gross domestic product (GDP), the national statistics agency said.

“Mining was down by 6.1 percent, driven largely by a fall in the production of platinum group metals, coal and iron ore. Gold saw some positive movement in the third quarter, according to the Mining: Production and sales release for September 2019.

“Manufacturing fell by 3.9 percent, but being a bigger industry than mining, its contribution to total GDP growth was just as large (-0.5 of a percentage point in both cases). The contraction was mainly due to decreases in the manufacturing of basic iron, steel, and machinery products, as well as products related to the petroleum, chemicals and plastics division,” read the statement by StatsSA.

Key facts from the GDP release for the third quarter of 2019:

Real GDP in the third quarter was down 0.6 percent quarter on quarter (seasonally adjusted and annualised). Unadjusted real GDP growth in the third quarter was 0.1 percent year on year. Unadjusted real GDP growth for the first nine months of the year was 0.3 percent year on year. Nominal GDP in the third quarter of 2019 was estimated at R1.29 trillion, higher than the R1.26 trillion recorded in the second quarter of 2019. Expenditure on GDP in the third quarter fell by 0.3 percent quarter on quarter (seasonally adjusted and annualised), largely the result of a drawdown in inventories. The construction industry failed to pull itself out of recession, registering its fifth consecutive quarter of negative growth. Decreases were reported for activities related to residential and non-residential buildings, as well as construction works.

StatsSA said the construction industry contributed R106 billion to total value added in the third quarter of 2019, lower than the R110 billion high recorded in the fourth quarter of 2016 (constant 2010 prices, annualised).

“The transport, storage and communication industry also found itself on the back foot, falling by 5.4 percent. This is the biggest quarter-on-quarter fall for the industry since 1993. A slowdown in activity related to freight and passenger transport damped growth in the third quarter.

“Agriculture saw its third consecutive quarter of contraction. Lower production was recorded for field crops such as maize, wheat, sunflower seeds, tobacco and soya beans.

“Positive gains were reported in the third quarter for the food & beverages and transport manufacturing divisions,” reads the report.

The national statistics agency said positive contributors to GDP growth in the third quarter were trade, government and finance. Positive growth in wholesale, motor trade and accommodation lifted the trade industry by 2.6 percent. A rise in civil service employment in provincial government and higher education institutions pushed general government services up by 2.4 percent.

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