South Africa’s mining output declined by 2.9% in October, following a 0.6% year-on-year decrease in September.
Nedbank says this was the third consecutive month of yearly contraction for the sector.
On a month-on-month seasonally adjusted basis, output grew by a modest 1% in October.
The main drivers of the year-on-year production decline in October were copper, diamonds and manganese ore, which fell by 41%, 39% and 12%, respectively.
Nedbank states that growth prospects for the mining sector remain subdued, owing to the resumption of power outages, high operational costs and an unfavourable policy environment.
Additionally, relatively flat commodity prices further exacerbate hindrances on growth in the sector.
“Weak economic activity persists, which was evident in the third quarter gross domestic product figures and October’s mining output release. This constitutes to the lack of demand pressure on prices.
“There is, therefore, a chance of a rate cut in January next year. However, we believe the Monetary Policy Committee may err on the side of caution and leave interest rates unchanged for an extended period,” Nedbank says.