South African mining and manufacturing see unexpected surge in October

South African mining and manufacturing production rose by more than expected in October in rare positive news for an economy battling shortcomings at its state-run power and logistics utilities.

Mining production climbed 3.9% in October from a year earlier after shrinking 1.9% in September. That beat forecasts for a 1.2% gain, according to the median estimate of six economists surveyed by Bloomberg.

The advance was led by a 16.9% jump in the production of platinum group metals.

The upsurge “sets a favourable starting point for the final quarter of this year and lowers the odds of an economic recession,” Jee-A van der Linde, senior economist at Oxford Economics, wrote in a note while warning that port congestion and power outages are a threat.

The country’s economy shrank in the third quarter as logistics constraints and a chronic electricity shortage took their toll.

Manufacturing, whose weight is more than twice that of mining in the South African economy, saw production rise 2.1% in October from a year earlier, compared with expectations for a 1.7% gain.

Strong contributions from the petroleum, chemical, rubber and plastic products categories helped, as did gains in motor vehicles, parts and accessories.

Base-effect comparisons with October 2022 — when a strike at state rail and port company Transnet disrupted businesses — also boosted the figure, said Lara Hodes, an economist at Investec.

“Despite October’s result, the sector remains lacklustre,” she wrote, pointing to recent muted readings on South African business confidence.

“Subdued global conditions and the myriad of domestic challenges also continue to impede manufacturing.”


Top JSE indices