South Africa's Q2 15 GDP likely to be 0.5% q/q saar

The production side of Africa's economy has also shown clear signs of strain during the second quarter as electricity shortages continue to bite. In the manufacturing sector, output fell in Q2 for the second consecutive quarter, by 4.9% q/q saar, after contracting 2.0% q/q saar in Q1. 

Given that the manufacturing output data closely track the corresponding manufacturing GVA data in the national accounts, this outcome suggests that manufacturing, which accounts for about 13% of GDP, likely subtracted even more from overall GDP growth in the second quarter. 

In mining, the June output data are not out yet, but the April and May prints were very weak, with seasonally adjusted production contracting 4.7% in each month, possibly reflecting electricity constraints and falling commodity prices. 

"A slight rebound is expected in June of 1.9% m/m (sa). Based on the forecast, overall quarterly output in the mining sector comes to -5.8% q/q saar, but these June data will only be released just half an hour before the national accounts data", says Barclays. 

There are also some uncertainties here, as Stats SA has indicated that mining data will be revised to account for updated gold production and sales, and it is unclear how this could affect the historical data. 

"Nonetheless, there is now enough evidence that growth momentum was even weaker than we had expected. Q2 GDP growth forecast is revised down to 0.5% q/q saar (from 1.5%), which implies full-year growth of 1.8%. For 2016, growth is forecasted at 2.2%", added Barclays.