In the second quarter, eight of the 10 industries in South Africa recorded gains
GDP exceeded economists’ predictions for economic growth and activity in the second quarter, after the marginal growth of 0.1% in the first quarter of the year. Mining, manufacturing, trade and consumer consumption were the sectors getting the GDP ball over the line.
Statistics SA announced the gross domestic product (GDP) data on Tuesday morning with the surprising news that the country’s GDP increased by 0.8% in the second quarter.
Manufacturing, mining and trade led growth on the production supply side of the economy, while the expenditure or demand side was also positive, lifted mainly by stronger household consumption and softer imports.
In the second quarter, eight of the 10 industries recorded gains, with only two – construction and transport & communication – declining.
This graph shows how the various sectors performed:
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Manufacturing and mining
Manufacturing, mining and quarrying and trade, catering and accommodation were the most significant positive contributors in the second quarter, each adding 0.2 of a percentage point to GDP growth.
Statistics SA points out that after two consecutive quarters of decline, manufacturing and mining both turned positive. Manufacturing production expanded by 1.8%, mainly driven by the automotive and petroleum, chemicals, rubber and plastics divisions.
Mining output grew by 3.7%, the fastest pace since the first quarter of 2021, when it grew by 4.4%. The platinum group metals, gold and chromium ore were the main positive contributors.
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Consumer activity and agriculture
Consumer activity was also upbeat, Statistics SA points out. The trade, catering and accommodation industry increased by 1.7%, its strongest showing since the first quarter of 2022, when it was 2.6%. Retail trade, motor trade, accommodation and food and beverages recorded gains, but wholesale trade was the exception, registering a dip in the second quarter.
Agriculture carried over some of its positive momentum, recording a third consecutive increase. The industry grew by 2.5%, after a revised 18.6% increase in the first quarter, primarily due to increased economic activity reported for horticulture and animal products, Statistics SA says.
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Two sectors that disappointed in GDP
Construction and transport, storage and communication disappointed for GDP in the second quarter. The construction industry witnessed its third consecutive decline, pulled lower by weaker economic activity related to residential and non-residential buildings.
Although there was an increase in construction works, it was not enough to lift the industry into positive territory. Land transport and transport support services also had a negative impact on growth in the transport, storage & communication industry.
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Household consumption and imports
Household consumption and imports were the most significant positive contributors to growth on the expenditure (demand) side of the economy, although a decrease in gross fixed capital formation and weaker exports contributed negatively, Statistics SA says.
This graph shows the two components that increased in expenditure on GDP:
Household consumption increased for a fifth consecutive quarter, rising by 0.8%. The miscellaneous category was the most significant positive contributor, driven higher mainly by increased spending on insurance, which forms part of miscellaneous goods and services.
This graph shows how household spending increased for most product categories:
Statistics SA says households also spent more on a variety of other products, most notably restaurants and hotels and clothing and footwear.
On the downside, there was lower demand for alcoholic beverages, tobacco and narcotics and housing, water, electricity, gas and other fuels.
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Increase in inventories but decrease in imports and exports
After five consecutive inventory drawdowns in the South African economy, there was a build-up of R16.6 billion in the second quarter. Statistics SA says the increase in inventories occurred across the mining and quarrying, transport, storage and communication and manufacturing industries.
Imports decreased by 2.1%, largely due to decreases in imported chemical products, machinery and electrical equipment, mineral products and vegetable products.
Exports were also down, driven lower mainly by declines in exported base metals and articles of base metals, vegetable products, and vehicles and transport equipment, excluding large aircraft.
