Output in South Africa’s two key industrial sectors of mining and manufacturing continues to be weak, data showed on Thursday, a further sign that the economy will have to rely on other sectors to drive growth.
Figures from Statistics SA showed mining output shrunk for the sixth time in eight months in December as gold, iron ore and coal production all contracted sharply.
The same month saw manufacturing output come close to a standstill, expanding 0.3% on yearly basis and contracting 2 percent from November, its worst month-on-month performance in a year.
The rand was trading weaker at 14.48 per dollar at 12:00 GMT, down from a session-best 14.42 prior to the release of the figures.
The currency has fallen around 9 percent in the last two months despite global conditions largely favouring risk assets, underlining the concerns attached to the poor domestic growth outlook and uncertainty ahead of national elections in May.
“It’s a poor start to 2019 and I’m struggling to see where growth momentum will come from, especially in the context of load-shedding,” said BNP Paribas economist Jeffrey Schultz, referring to power cuts by state utility Eskom.
“Business activity, new sales orders, all of these numbers reflect very weak demand.”
The economy, Africa’s most industrialised, grew 0.8% in 2018 and is seen by the Treasury expanding 1.5% in 2019. But the nationwide electricity blackouts and subdued spending by cash-strapped consumers and investors are viewed as obstacles to President Cyril Ramaphosa’s plans to revive growth.