Mining production (not seasonally adjusted) grew by 1.4% y/y in October, marking a deceleration from the revised 4.9% y/y increase (previously 4.7%) recorded in September. This result fell short of the Reuters consensus forecast of a 2.9% rise. Seasonally adjusted, mining output, critical for quarterly GDP calculations, contracted by 3.0% m/m, indicating a weak start to the fourth quarter. Notably, a retrospective revision in September’s data—from 3.8% m/m to 4.5% m/m—slightly boosted third-quarter mining output, potentially increasing the sector’s contribution to the 3Q24 GDP figure.
Outlook
Year-to-date (January to October), mining output has risen by approximately 1.0%, a modest improvement compared to flat growth in 2023. This growth has been supported by strong performances in chromium ore, platinum group metals (PGMs), coal, and manganese ore.
While the mining sector benefits from easing energy constraints and improving logistics, growth in the near term is expected to remain moderate due to a subdued external demand environment. Over the medium term, accelerating reforms in ports and rail infrastructure will be critical to enhancing productivity and profitability in the sector.
Selected sector analysis
The modest increase in mining production was broad-based, with growth recorded in seven out of 12 sectors. Zoning into the key mining divisions:
- PGMs increased by 3.3% y/y contributing 1.0 percentage point (ppt) to total mining output growth, down from a 6.7% increase in September. On a seasonally adjusted basis, PGM output was relatively subdued, rising just 0.6% m/m.
- Coal output expanded by 1.8% y/y, adding 0.4ppts to total output growth, rebounding from a 4.0% contraction (revised from -4.4%) in September. Monthly seasonally adjusted coal output was nearly flat at 0.1%, following a 1.0% monthly increase in September.
On the downside:
- Iron ore output declined by 6.4% y/y after expanding by 10.0% y/y in September, dragging total mining output growth by 0.7ppts. Seasonally adjusted output declined sharply by 14.3% m/m.
- Gold output continued its downward trend, contracting by 3.4% y/y and dragging growth by 0.5ppts. October marked the 12th consecutive month of annual decline in gold output.
- Manganese ore output declined by 4.3% y/y reducing total mining growth by 0.3ppts, after a 15.3% y/y increase in September. Seasonally adjusted output dropped significantly, contracting by 10.8% m/m.
Manufacturing output (not seasonally adjusted) increased by 0.8% y/y in October, surpassing the Reuters consensus forecast of 0.3%. This marks a rebound from September’s revised contraction of 1.4% y/y (previously -0.8% y/y). However, the motor vehicles, parts, and accessories division continues to weigh on overall output, posting sustained double-digit declines. On a seasonally adjusted basis, manufacturing output rose 0.4% m/m in October, recovering from a 0.2% m/m contraction (previously flat at 0.0%) in September. This signals a slightly better start to the fourth quarter.
Outlook
The manufacturing sector remains under pressure, constrained by weak domestic demand and a challenging global environment. Despite reduced energy constraints and modest input costs (as reflected in subdued producer price inflation and lower fuel prices), year-to-date manufacturing production is down 0.4%. The leading PMI business activity indicator declined to 49 points in November from 55.6 in October, suggesting that monthly output could remain subdued. Nonetheless, the manufacturing PMI’s expected business conditions index was decent at 62.3 points, indicating that manufacturers foresee modest improvements in operating conditions in the near term.
We anticipate a gradual and uneven recovery as demand strengthens, supported by easing cost-of-living pressures and a stabilising global growth environment. The anticipated rebound in private sector fixed investment from next year should support manufacturing activity.
Selected sector analysis
Seven out of ten manufacturing divisions contributed to the 0.8% y/y expansion in total manufacturing output in October. Within the major divisions:
- Petroleum, chemical products, rubber, and plastic products expanded by 4.5% y/y, after expanding by 1.9% y/y in September, contributing 0.9 percentage points (ppts) to total manufacturing output growth.
- Food and beverages output increased by 2.9% y/y, adding 0.7ppts, after increasing by 1.0% y/y in September.
- Basic iron and steel, non-ferrous metal products, metal products and machinery increased by 2.7% y/y, after contracting by 0.4% y/y in September, adding 0.6ppts.
- Wood and wood products, paper, publishing, and printing increased marginally by 0.4% y/y after contracting by 1.8% y/y in September.
Limiting the improvement in total manufacturing output:
- Motor vehicles, parts and accessories, and other transport equipment continues to experience significant declines. In October, this division dropped by 16.6% y/y, after falling 18.9% y/y in September. Weak performance in this division remains broad-based, with motor vehicles production down by 8.9% year-to-date compared to the same period last year. Bodies for motor vehicles, trailers, and semi-trailers are down by 11.4%, and parts and accessories are down 18.1%, over the same period.
