The contraction in the primary sector resulted from decreases in both agricultural and mining output in the second quarter of 2024. Agricultural activity was weighed down by the lower production of animal products and field crops, with the domestic maize crop harvest expected to be more than 20% lower than the 2023 harvest. The decrease in mining output resulted largely from the lower production of iron ore, coal and diamonds amid ongoing domestic rail and port inefficiencies as well as subdued prices of some commodities.

The real output of the secondary sector reverted from a contraction in the first quarter of 2024 to an expansion in the second quarter, largely reflecting the turnaround in manufacturing production, a notable increase in electricity, gas and water activity and a recovery in the construction sector. Manufacturing production was likely boosted by the stable supply of electricity in the second quarter of 2024 as the production of both durable and non-durable goods increased. The real output of the sector supplying electricity, gas and water increased notably in the second quarter of 2024 as the volume of both electricity produced and consumed increased, enabled by Eskom’s improved energy availability factor, while water consumption also increased. Following four successive quarters of contraction, the real GVA by the construction sector expanded in the second quarter of 2024 as residential and non-residential building activity increased.

The real GVA by the tertiary sector recorded a broad-based expansion in the second quarter of 2024 as the real output of the commerce sector increased at a faster pace, driven by real wholesale and retail trade activity. The expansion in the real GVA by the finance, insurance, real estate and business services sector reflected increased activity in the financial intermediation, real estate and business services subsectors. By contrast, the real output of the transport, storage and communication services sector contracted further in the second quarter of 2024 as activity in land freight transportation and transport support services decreased, while passenger journeys undertaken by rail increased alongside the restoration of five more Metrorail lines.

Real gross domestic expenditure increased by 1.0% in the second quarter of 2024 following a decrease of 0.6% in the first quarter. Real final consumption expenditure by households contributed the most to growth in real GDP in the second quarter of 2024, followed by general government and an accumulation in real inventory holdings. By contrast, net exports detracted the most from real GDP, followed by a further deduction by real gross fixed capital formation over this period.

Real final consumption expenditure by households reverted to an increase of 1.4% in the second quarter of 2024 from a marginal decline in the first quarter. The increase was broad-based across the expenditure components, supported by an increase in the real disposable income of households. Household spending on semi-durable goods and services reverted to an increase in the second quarter, while real outlays on durable and non-durable goods increased further.

Household debt as a percentage of nominal disposable income edged lower from 63.0% in the first quarter of 2024 to 62.2% in the second quarter as the increase in nominal disposable income exceeded that in household debt. Households’ cost of servicing debt relative to disposable income decreased marginally from 9.2% to 9.1% over this period, reflecting the slower pace of increase in the stock of debt, while the prime lending rate remained unchanged.

Households’ net wealth increased in the second quarter of 2024 as the market valuation of their total assets exceeded that of their total liabilities. The higher value of assets largely reflected higher share prices, with the FTSE/JSE All-Share Index gaining, on balance, 6.9% in the second quarter of 2024, while the value of housing stock declined. The ratio of net wealth to nominal disposable income increased from 389% in the first quarter of 2024 to 393% in the second quarter as household’s net wealth increased at a faster pace than that in nominal disposable income.

Real gross fixed capital formation contracted further by 1.4% in the second quarter of 2024 as all three organisational types reduced capital outlays. Fixed investment spending by the private sector decreased for a second successive quarter in the second quarter of 2024, while capital spending by the public sector reverted to a decrease. Consequently, the level of real gross fixed capital spending in the first half of 2024 was 5.0% lower than in the corresponding period of 2023.

Total household-surveyed employment decreased by 92 000 in the second quarter of 2024 but remained above its pre-COVID-19 level. Job shedding occurred in the formal, agricultural and private household sectors in the second quarter, while the informal sector employed more people. The year-on-year pace of increase in total household-surveyed employment slowed further from 3.4% in the first quarter of 2024 to 1.9% in the second quarter, partly due to base effects created by employment opportunities related to the Presidential Youth Employment Initiative (PYEI) in the community, social and personal services sector a year earlier.

The official unemployment rate increased for a third consecutive quarter, from 32.9% in the first quarter of 2024 to 33.5% in the second quarter, due to a further increase in the number of unemployed persons. The not economically active population in South Africa increased by 72 000 persons over this period as the increase in the number of discouraged work seekers outweighed the decrease in the other not economically active category. As a result, the expanded unemployment rate also increased further, from 41.9% in the first quarter of 2024 to 42.6% in the second quarter.

Year-on-year growth in formal non-agricultural nominal remuneration per worker accelerated from 4.3% in the fourth quarter of 2023 to 5.1% in the first quarter of 2024 as the acceleration in public sector remuneration growth per worker, which was driven by base effects related to the temporary PYEI workers, outweighed the deceleration in private sector remuneration growth. Consequently, the year-on-year pace of change in real remuneration per worker reverted from a decrease of 0.6% in the first quarter of 2024 to an increase of 2.0% in the second quarter.

Growth in labour productivity in the formal non-agricultural sector accelerated marginally from 1.6% in the fourth quarter of 2023 to 1.7% in the first quarter of 2024 as the year-on-year growth in non-agricultural output moderated at a slower pace than that in employment. Likewise, growth in nominal unit labour cost accelerated from 2.6% to 3.4% over the same period as year-on-year growth in output slowed at a faster pace than that in total remuneration. Growth in economy-wide nominal unit labour cost accelerated from 3.1% in the first quarter of 2024 to 4.3% in the second quarter as year-on-year growth in the compensation of employees accelerated, while that in output slowed marginally.

Domestic inflationary pressures eased somewhat in the first seven months of 2024 as both headline consumer and producer price inflation decelerated. Producer price inflation for final manufactured goods moderated to 4.2% in July 2024, largely due to slowdowns in the producer price inflation for food products, metals, machinery and equipment as well as coal and petroleum products. Consumer price inflation moderated to below the 4.5% midpoint of the inflation target range for the first time in 40 months in August 2024 due to an easing in food and fuel price inflation. Both goods and, to a lesser extent, services price inflation moderated over this period, with the slower goods price inflation driven by a broad-based moderation in the prices of all durability categories. Underlying inflationary pressures remained fairly contained, with core inflation slowing further below the midpoint of the inflation target range in August 2024.

South Africa’s trade surplus widened further to R187 billion in the second quarter of 2024 from R166 billion in the first quarter as the value of merchandise and net gold exports increased more than the value of merchandise imports. The increase in the value of merchandise exports reflected higher prices, while that of imports reflected both higher prices and volumes. South Africa’s terms of trade improved further in the second quarter of 2024 as the rand price of exported goods and services increased more than that of imports.

The value of merchandise exports increased by 1.7% in the second quarter of 2024 as increases in the value of manufacturing and mining exports outweighed the sizeable decrease in the value of agricultural exports. The increase in the value of mining products largely reflected higher exports of platinum group metals, base metals and articles thereof as well as mineral products. The increase in manufacturing exports was fairly broad-based among the subsectors, with the exports of chemical products, machinery and electrical equipment as well as prepared foodstuffs, beverages and tobacco increasing notably. The significant reduction in agricultural exports reflected the lower export value of vegetable products, particularly maize, as well as raw hides and skins, which outweighed the increased exports of live animals and animal products.

The value of merchandise imports increased by 2.6% in the second quarter of 2024 as the higher imports of agricultural and manufactured products outweighed the decline in mining imports. The substantially higher value of agricultural imports can be attributed to increased rice and wheat imports required to supplement demand in the domestic market. The increase in manufacturing imports was driven primarily by higher imports of vehicles and transport equipment as well as textiles and articles thereof. The increase in imported vehicles and transport equipment reflected the increased imports of passenger vehicles as well as imported parts used in vehicles manufactured for the export market.

The shortfall on the services, income and current transfer account narrowed from R273 billion (3.8% of GDP) in the first quarter of 2024 to R252 billion (3.4% of GDP) in the second quarter. This resulted from a smaller deficit on the income account, which outweighed the larger deficits on the services and current transfer accounts. Together with the wider trade surplus, this resulted in a further narrowing of the deficit on the current account of the balance of payments from R107 billion (1.5% of GDP) in the first quarter of 2024 to R64.6 billion (0.9% of GDP) in the second quarter.

The net flow of capital on South Africa’s financial account of the balance of payments (excluding unrecorded transactions) switched from an inflow of R51.4 billion in the first quarter of 2024 to an outflow of R18.1 billion in the second quarter. On a net basis, portfolio investment and financial derivatives recorded outflows, while direct investment, other investment and reserve assets recorded inflows.

South Africa’s total external debt increased marginally from US$158.1 billion at the end of December 2023 to US$158.3 billion at the end of March 2024. Expressed in rand terms, South Africa’s total external debt increased from R2 938 billion to R3 007 billion over this period.

South Africa’s positive net international investment position increased further from a revised R2 028 billion at the end of December 2023 to R2 537 billion at the end of March 2024. This resulted from a significant increase in foreign assets, mainly emanating from strong growth in foreign share market indices, while foreign liabilities decreased.

The nominal effective exchange rate of the rand increased by 5.2% in the second quarter of 2024 following an increase of 0.8% in the first quarter. The exchange value of the rand reflected improved investor sentiment towards the domestic economy following the outcome of South Africa’s national elections and the formation of a government of national unity (GNU). Furthermore, the relatively stable domestic electricity supply alongside increased expectations of monetary policy easing by the United States (US) Federal Reserve (Fed) also supported the exchange value of the rand in the second quarter of 2024. From the end of June 2024 to mid-August, the exchange value of the rand experienced some volatility as tensions in the Middle East escalated and global investors became more risk averse amid concerns of a possible economic recession in the US following worse-than-expected unemployment statistics. However, the expectation of lower interest rates in the US supported the exchange value of the rand up to 13 September 2024.

Growth in the broadly defined money supply (M3) moderated further in the first half of 2024, continuing the trend that started in mid-2023. After a robust expansion in the first half of 2023, growth in M3 nearly halved to average 5.6% in the first six months of 2024. In July 2024, growth in M3 accelerated somewhat to 5.9%. The moderating trend was largely influenced by a notable slowdown in the deposits of financial companies, with deposit holdings of households and non-financial companies supporting overall money supply up to July 2024. The quarter-to-quarter seasonally adjusted and annualised growth in M3 decelerated notably to 3.0% in the second quarter of 2024 from 10.1% in the first quarter.

Year-on-year growth in total loans and advances by monetary institutions to the domestic private sector remained muted and averaged 4.1% in the first half of 2024 compared with the average growth rate of 8.7% in the same period of 2023. In July 2024, growth in total loans and advances moderated to 3.8%. The moderation in credit extension over the past 18 months occurred across both the corporate and household sectors, although credit extension to the corporate sector picked up slightly in recent months as growth in instalment sale credit to companies remained robust. Growth in household credit extension decelerated across most credit categories, with the slowdown noticeable in most unsecured loans categories amid higher interest rates and tighter lending criteria by banks.

The yield on 10-year South African rand-denominated government bonds declined notably by 201 basis points from 12.23% on 16 April 2024 to 10.22% on 13 September. The downward trend was supported by, among other factors, the appreciation in the exchange value of the rand, the moderation in domestic consumer price inflation and positive investor sentiment following the formation of the GNU. The decrease also reflected lower international bond yields, driven by expectations of interest rate cuts by the Fed in particular as well as other central banks.

The total nominal value of outstanding listed and unlisted rand-denominated debt securities issued by residents and non-residents in the domestic primary debt market increased by 7.5% year on year to R6.6 trillion at the end of July 2024. General government still contributed the bulk of the total outstanding amount of debt securities in issue at 73.7% at the end of July 2024, with net issuance by general government increasing by 44.8% in the first seven months of 2024 compared with the same period of 2023, reflecting the government’s larger borrowing requirement. By contrast, corporations switched to net redemptions in the first seven months of 2024, which were mainly concentrated in non-financial corporations, while banks recorded net issuance of listed debt securities, which offset the net redemptions in unlisted debt securities.

The preliminary non-financial public sector borrowing requirement of R77.2 billion in the first quarter of fiscal 2024/25 (April–June 2024) was R10.7 billion less than in the same period of the previous fiscal year. The lower borrowing requirement reflected the notably smaller deficit of the consolidated general government, mostly due to the larger surplus of extra-budgetary institutions and the smaller cash deficit of local government. Consolidated provincial government’s cash surplus switched to a deficit due to significantly higher payments for operating activities. The non-financial public enterprises and corporations, or state-owned companies, recorded a larger cash deficit for the period under review.

National government’s cash book deficit of R52.3 billion in April–June 2024 was R5.9 billion higher compared with the same period of the previous fiscal year as growth in expenditure outpaced that in revenue. The larger net borrowing requirement was financed in the domestic financial markets through the net issuance of long-term government bonds as well as Treasury bills and short-term loans. As such, national government’s total gross loan debt increased by 8.3% year on year to R5 360 billion as at 30 June 2024, owing to the higher net issuance of domestic debt.