Economic activity loses traction - Sarb

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Fin24/ Sapa - Jun 20th, 15:11

Johannesburg - Economic growth in the first quarter of 2013 remained subdued due to contraction in the manufacturing sector, the SA Reserve Bank (Sarb) said on Wednesday.
 

In its quarterly bulletin released on Wednesday, the Sarb said economic activity lost traction in the first quarter as GDP registered growth of just 0.9%.

This was less than the current pace of population growth, the bank said.

"The marked loss of growth momentum was largely due to a contraction in manufacturing output, as steel production was affected by a fire at a large steel mill and petroleum refineries were shut down for maintenance," the bank said.

Simultaneously, agricultural output declined as a dry mid-season spell resulted in a downward revision in crop estimates.

Following declines in the second half of 2012, the real value added by the mining sector rebounded, rising at an annualised rate of 14.6% in the first quarter of 2013.

The bank said recovery in mining output could mainly be attributed to increases in the production of gold and platinum over the period. The gold mining sector benefited from increased production following strikes in the second half of 2012.

Platinum production continued to recover from work stoppages that affected the industry in the second half of 2012.

In the construction industry, activity in the residential and non-residential building sectors picked up somewhat in the first quarter of 2013.

The services sector's real output continued expanding at a reasonably firm pace, buoyed by activity in the finance, retail trade, and communication sub-sectors.

Growth in real disposable income of households and the pace of increase in real final consumption expenditure by households both moderated somewhat in the first quarter of 2013.

The pace of spending on durable goods continued to lose momentum, especially in the area of purchases of new motor vehicles, albeit off a high base, the bank said.

Expenditure on semi-durable goods remained firm, supported by resilient spending on clothing and footwear.

Growth in real gross fixed capital formation slowed further in the first quarter of 2013.

Of the main three institutional sectors, only general government registered an acceleration as provincial and central government departments increased their capital spending on housing and construction works.

Fixed capital outlays by both private business enterprises and public corporations registered slower growth.

Subdued economic growth was reflected in low job creation. Employment rose only by 1.5% over the first quarter of 2013. Employment was also skewed towards the public sector.

In the first quarter of 2013, the deficit on the current account balance of payments narrowed to 5.8% of GDP. Although imports rose significantly as domestic expenditure expanded, this fell short of the increase in exports.

In the first five months of 2013, the rand depreciated due to various factors. These included a comparatively large current-account deficit, loss of international competitiveness, labour unrest, the possibility of weaker global demand for commodities, and concerns about further sovereign debt downgrades.

Household debt to disposable income remained at 75.4%.

However, debt servicing costs rose from 7.6% to 7.7%.From Fin24.com