Weak mining, manufacturing data put pressure on South Africa recovery
JOHANNESBURG, May 10 (Reuters) – South Africa's mining and manufacturing industries contracted in March as policy uncertainty and lukewarm demand weighed on output, threatening to reverse a fragile economic rebound.
Mining production in March suffered its sharpest fall in two years and industrial output dropped, Statistics South Africa data showed on Thursday, prompting concerns that gross domestic product may slip into the red in the first quarter.
"The mining stats as well as the manufacturing figures signal a very dismal quarter one growth number. They'll place the whole growth scenario under pressure, to the extent we could see Q1 growth of between 0 and 0.5 percent," said an analyst at NKC African Economics Elize Kruger.
Mining production contracted 8.4 percent year on year, though that compared with an unusually high figure in 2017. The industry also took a hit from wrangling between government and miners over proposed legislation to increase black ownership in the sector.
Manufacturing contracted by 1.3 percent year-on-year, with the consumer-facing sectors of clothing and electronic items taking the hardest hit, falling by over 10 percent each.
South Africa's economy grew more than expected last year, by 3.1 percent in the final quarter and 1.3 percent for the whole year, cheered by agricultural output as the effects of severe drought eased.
Economists said Cyril Ramaphosa's election as leader of the ruling African National Congress late in the last quarter of 2017, and as President in February, had also raised hopes the country would make economic reforms.
But enthusiasm has been tempered by local and external headwinds, analysts said, including a U.S. decision to impose tariffs on steel exports and a rising dollar threatening Pretoria's 2018 target of GDP growth near 2 percent.
(Reporting by Mfuneko Toyana; Editing by James Macharia and Andrew Heavens)