Economists expect rebound in mining, manufacturing
Mining and manufacturing are poised to report a strong recovery for January 2018. But growth in the coming months may be tricky as uncertainty over the dollar and China’s economic expansion clouds the outlook for commodity prices — a key factor for the performance of both industries.
Domestically, new Mineral Resources Minister Gwede Mantashe’s success in undoing policy bottlenecks that crimp investment and activity in the sector will be key to its growth, said BNP Paribas economist Jeffrey Schultz.
“While a rebound in the year-on-year growth rate is probably likely in January, the bigger picture for the mining industry remains challenging.” The stronger rand recently had lowered the rand gold price considerably, leading to losses for many large gold mines.
Investec’s house view is that mining has grown at 5% year on year in January, from December’s 0.1% year on year. “Lower statistical base factors in January 2017 account for some of the forecast lift,” economist Laura Hodes said.
However, FNB chief economist Mamello Matikinca said: “We think any meaningful bounce-back in January is unlikely, given the strengthening of the currency and several mine stoppages, which could have affected production volumes.”
Statistics SA will publish mining production and sales data on Wednesday.
Manufacturing is expected to continue its stronger recovery. BNP Paribas’s house view is of 2.8% year-on-year growth for manufacturing production in January from 2% in December. This follows a lift in key purchasing managers’ indices in January and February and was also boosted by still positive annualised growth in exports, Schultz said.
The Bloomberg survey of economists reflects a consensus of 2.8% growth for January, while Investec predicted 2.5%.
The Manufacturing Circle is predicting better prospects and will on Monday publish results of its fourth-quarter investment tracker, which will indicate a rise in investment in the industry.
Official manufacturing data will be released on Tuesday.
Other data to be released include the Bureau for Economic Research business confidence index for the first quarter of 2018, sponsored by Rand Merchant Bank.
The index will be published on Wednesday, the same day that the South African Chamber of Commerce releases its trade conditions survey for February.
Statistics for civil cases of debt and selected building statistics are due on Thursday.