The Real Economy Bulletin - Third Quarter 2016

Main bulletin: The Real Economy Bulletin - Third Quarter 2016

In this edition: 

Quarterly GDP growth: South Africa’s third quarter GDP growth, seasonally adjusted but not annualised, fell back to 0,05% compared to the surprisingly strong 0,8% expansion in the second quarter. Mining continued to recover from the sharp drop in the second quarter, growing by 1,4%, while manufacturing gave up the gains it made in the previous quarter. Agriculture lost ground for the seventh quarter in a row. Read more.

Employment: Total employment remained virtually unchanged from the third quarter of 2015 to the third quarter of 2016. But the composition of employment changed. Manufacturing and community services lost around 85 000 jobs each. Business services created around the same number, almost entirely in security and cleaning. CCMA data point to significant retrenchments in the mining value chain over the pat year. Read more.

Trends in trade: In the third quarter of 2016, imports increased in rand terms while exports declined, wiping out the balance of trade surplus experienced in the second quarter of the year. Compared to the previous third quarter, manufacturing imports continued to decline in rand terms while exports stabilised, mostly due to continued growth in foreign auto sales. Read more.

Behind the trends: Slow growth in South Africa mostly reflects the broader global trend since 2011. In the past quarter, the slump in investment deepened. The fiscal consolidation promised by the Medium Term Budget Policy Statement (MTBPS) seems likely to add to the downward pressures on the economy. Read more.

Briefing note - The national minimum wage and manufacturing: November 2016 saw the report of the National Minimum Wage Panel, which proposed a minimum wage of R3 500 phased in by mid-2019. This note analyses the implications for the main sectors of the economy and for manufacturing industries based on the available wage-survey data. Read the briefing note online: The national minimum wage and manufacturing. 

Briefing note - Food prices and inflation:  The international Food and Agricultural Organisation (FAO) found that world food prices declined by 17% in 2015 from the previous year, falling to the lowest level since 2009. This trend contrasts sharply with the situation in South Africa, where food prices have surged from 1994. The recent drought has only aggravated the longer-standing problem. Read the briefing note online: Food prices and inflation.