Six industries perform poorly in first quarter

Six industries perform poorly in first quarter

Stats SA reported a rather bleak economic picture on the first fiscal quarter of 2024 on Tuesday, 4 May 2024. The report showed that six industries performed poorly leading to a marginal GDP contraction of 0.1%,

The agricultural sector held the economy of South Africa up recording growth during the period in review. According to Stats SA, the sector recorded the largest growth of 13.5% making the biggest positive contribution in the economy.

“Agriculture was spurred on mainly by a buoyant horticulture sector that recorded a rise in the production of fruit. Other positive contributors include maize and animal products,” said Stats SA.

Though having minimal impact on the economy, trade, catering & accommodation, personal services and finance, real estate & business services industries also registered positive growth, but only just managed to keep their heads above water. Trade, catering & accommodation was marginally up on stronger wholesale trade sales, tourist accommodation, and economic activity in the restaurant, catering and fast-food sector.

Six out of the ten industries performed rather weaker in the first quarter. Stats SA says manufacturing, mining and construction drove much of the downward momentum on the production (supply) side of the economy, while the expenditure (demand) side witnessed a decline across all components.

Manufacturing was the largest negative contributor, declining by 1,4% and pulling GDP growth down by 0,2 of a percentage point. Five of the ten manufacturing divisions recording a lackluster quarter. The automotive sector was the largest negative contributor, pulled lower by weaker demand for new vehicles and transport parts & accessories.

Mining output contracted by 2,3%, with platinum group metals, coal, gold and manganese ore the largest drags on growth. Construction continued a downward trend, recording a fourth consecutive quarter of decline. The industry shrank further by 3,1% in the first quarter, pulled lower by weaker economic activity related to residential buildings and construction works.

“Exports decreased by 2,3%, pulling overall expenditure on GDP growth down by 0,7 of a percentage point. The decline was mainly due to weaker exports of precious stones and precious metals, vehicles & transport equipment (excluding aircraft), chemical products, base metals and mineral products. Despite the overall negative growth, exports of vegetable products increased in the first quarter, reflecting the agriculture industry’s positive showing on the supply side of the economy.

Imports were also down, largely influenced by decreased trade in mineral products, vehicles & transport equipment (excluding aircraft) and vegetable products,” said Stats SA.

Stats SA says weaker domestic production and decreased imports in the first quarter stymied the flow of goods in the economy. As a result, the manufacturing, mining and personal services industries drew from their inventories. The R5,5 billion drawdown in the first quarter was the second largest drag (after exports) on overall economic growth, contributing -0,5 of a percentage point.


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