“This improvement was entirely due to the primary sectors, with agriculture gaining 5.8 % and mining output increasing a whopping 31 % as its output recovered from the sharp strike-related falloff in the first quarter of 2012” said Cees Bruggemans of FNB.
However, strip mining out and the remainder of South Africa’s Gross Domestic Product (GDP) grew by barely 1.9 %.
Construction grew by a reasonable 4 %, but the retail, wholesale and motor trades succeeded in only doing 2.8 %, financial services and government both barely grew by 2 % while manufacturing output disappointed by declining by 1 %, blamed mainly on poor exports, but with the Kagiso PMI also indicating domestic order weakness in 2Q2012, added Bruggemans.
Economists at Nedbank said that the economy was still expected to grow by 2.5 % for 2012, adding that mining would come under renewed pressured because of a weak global economy.
Manufacturing would be hurt by weak external demand, while consumer orientated sectors would continue to see growth but at a slower pace, as growth in disposable income moderates due to higher inflation and a stagnant jobs market.
“The latest GDP figures were in line with expectations and are unlikely to have implications for monetary policy in the short term,” said Nedbank, adding that the Reserve Bank’s Monetary Policy Committee was likely to maintain its accommodative monetary policy stance in the months ahead.
“With the inflation outlook likely to start deteriorating once the effects of the weaker rand and higher food and oil prices start to filter through, we think that the MPC will keep interest rates on hold rather than ease further. No change is expected until at least the fourth quarter of 2013,” explained Nedbank.
The MPC will hold its next meeting from 18 – 20 September 2012.