15 Jul.
Nedbank Economic Commentary: Mining production – May 2011.
Non-gold mining production remains strong on an annual basis.
- Growth in mining output dropped to 9,6 % y-o-y in May from a revised 12,0 % (previously 12,4 %) in April, with total production down by 5,9 % m-o-m on a seasonally adjusted basis.
- Gold output fell by 5,8 % y-o-y, while non-gold output was up by 12,1 % y-o-y.
- The outlook for the mining sector has worsened in recent weeks. Although commodity prices remain supportive there are indications of a slowdown in global demand. The strength of the rand, which hampers export competitiveness, as well as limited transport and energy capacity are also hurting the sector. The threat of labour strikes, with labour unions having declared disputes with some mining houses, does not bode well for mining activity in the coming months. Therefore, some moderation in mining output could be experienced during the second half of the year due to a high base established in 2010 and some loss in growth momentum internationally.
- These numbers, combined with manufacturing data released earlier this week, indicate some loss of momentum in production activity in the economy. These, against the backdrop of recent data suggesting that consumer demand remains moderate, support the view that the Reserve Bank will be reluctant to hike interest rates unless there is evidence of second-round inflation. We therefore maintain our view that the first hike in interest rates will come only in early 2012. …
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