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The contraction of 10.0% in real gross value added by the primary sector in the third quarter of 2024 was driven by a notable decline in the real output of the agricultural sector, largely due to the lower production of field crops as unfavourable weather conditions and rising input costs continued to hamper agricultural output. By contrast, mining output rebounded in the third quarter of 2024 following two successive quarters of contraction as production volumes increased in 6 of the 12 mineral groups, particularly manganese ore, chromium ore, coal and copper. However, mining output continued to be impeded by, among other factors, inefficient rail and port infrastructure, higher cost of operating aging mines, muted investment, weak global demand and lower commodity prices.
The real output of the secondary sector increased at a slower pace in the third quarter of 2024 as real economic activity moderated in both the manufacturing and electricity, gas and water sectors, while the output of the construction sector expanded further. The increase in manufacturing production volumes was mainly driven by higher production in the subsectors supplying basic iron and steel, non-ferrous metal products, metal products and machinery as well as furniture and other manufacturing. However, the average level of real manufacturing output in the first three quarters of 2024 was 0.3% lower than a year earlier, reflecting the impact of subdued domestic and global demand as well as logistical constraints. The increase in the volume of both electricity production and consumption reflected the sustained improvement in Eskom’s electricity availability factor since the end of March 2024, which contributed to the continued suspension of electricity load-shedding and thus supported domestic economic activity. Real economic activity in the construction sector expanded further as civil construction and non-residential building activity increased.
Real economic activity in the tertiary sector increased further in the third quarter of 2024, albeit at a marginally slower pace. The output of the finance, insurance, real estate and business services and personal services sectors expanded further, while that of the commerce, general government services, and transport, storage and communication services sectors contracted. The expansion of 1.3% in the finance, insurance, real estate and business services sector reflected increased activity in monetary intermediation, insurance, financial auxiliary services, real estate and other business services. By contrast, the real output of the commerce sector contracted by 0.4% in the third quarter following two quarters of expansion due to a decline in wholesale and motor trade activity, while retail trade activity increased. The real GVA of the transport, storage and communication services sector contracted for a third successive quarter in the third quarter of 2024, weighed down by reduced activity in land transportation and transport support services.
Real gross domestic expenditure declined by 0.5% in the third quarter of 2024 following an increase of 1.0% in the second quarter. Real final consumption expenditure by general government decreased alongside the deaccumulation in real inventory holdings. By contrast, real final consumption expenditure by households and gross fixed capital formation increased. The change in real inventory holdings subtracted 0.5 percentage points from growth in real GDP in the third quarter of 2024, while final consumption expenditure by households contributed positively at 0.3 percentage points.
Growth in real final consumption expenditure by households moderated to 0.5% in the third quarter of 2024 from 1.2% in the second quarter, reflecting the slower pace of increase in the real disposable income of households. Real expenditure on durable goods, semi-durable goods and services increased at a slower pace, while growth in real spending on non-durable remained unchanged in the third quarter. However, measured over a year, real spending by households accelerated to 1.4% over this period, while the average level of real spending by household in the first three quarters of 2024 was 0.6% higher than in the corresponding period of 2023.
Household debt as a percentage of nominal disposable income edged higher to 62.2% in the third quarter of 2024 from 62.1% in the second quarter as the increase in household debt exceeded that in nominal disposable income. By contrast, households’ cost of servicing debt relative to disposable income remained broadly unchanged at 9.1% over the same period.
Households’ net wealth increased further in the third quarter of 2024 as the increase in the market value of total assets outweighed the rise in total liabilities. The higher value of assets resulted from an increase in both share prices and the value of housing stock, with the former buoyed by the 8.6% increase, on balance, in the FTSE/JSE All-Share Index in the third quarter. Although growth in nominal residential property prices remained subdued, the year-on-year rates of increase in the available house price indices accelerated in recent months alongside the deceleration in headline consumer price inflation, improved consumer confidence and the recent interest rate reductions.
Following four successive quarters of contraction, real gross fixed capital formation increased by 0.3% in the third quarter of 2024 due to increased capital spending by general government and public corporations, while fixed investment by private business enterprises decreased further. Measured by asset type, real gross fixed investment increased mainly in other assets and construction works in the third quarter of 2024. Despite the increase, the average level of real gross fixed capital formation in the first three quarters of 2024 was still 4.4% lower than in the same period of 2023.
Total household-surveyed employment increased by 294 000 in the third quarter of 2024 following broad-based job gains in three of the four main sectors, namely the formal, informal and agricultural sectors. By contrast, the private household sector recorded job losses over this period. The increase in formal sector employment in the third quarter of 2024 was largely driven by job gains in the construction, mining and transport, storage and communication services sectors. The year-on-year pace of increase in total household-surveyed employment slowed further from 1.9% (306 000) in the second quarter of 2024 to 1.2% (201 000) in the third quarter, partly due to base effects related to the Presidential Youth Employment Initiative (PYEI) a year earlier. As such, employment contracts of a limited duration decreased by 6.3%, while permanent and unspecified duration contracts decreased by 1.5% and 0.7% respectively.
The official unemployment rate decreased to 32.1% in the third quarter of 2024 following three consecutive quarterly increases as the sharp decrease in the number of unemployed persons far outpaced the increase in the number of those employed. The not economically active population increased sharply by 214 000 persons in the third quarter of 2024, driven by an increase in both the number of discouraged work seekers and those categorised as other not economically active persons. Nonetheless, the expanded unemployment rate, which includes discouraged work seekers, decreased from 42.6% in the second quarter of 2024 to 41.9% in the third quarter, largely driven by the significant decrease in the number of officially unemployed persons.
Year-on-year growth in nominal remuneration per worker in the formal non-agricultural sector accelerated further from 4.9% in the first quarter of 2024 to 5.5% in the second quarter as remuneration growth per worker accelerated in both the public and private sectors. The acceleration in public sector nominal remuneration growth was noted at the national and provincial government levels following the annual public sector wage increase, along with base effects associated with the large number of temporary PYEI workers employed a year earlier. Wage growth per private sector worker accelerated in the mining; finance, insurance, real estate and business services; and private community, social and personal services sectors. However, in real terms, growth in remuneration per worker decelerated from 1.8% to 0.9% over the same period.
Growth in labour productivity in the formal non-agricultural sector accelerated from 1.6% in the first quarter of 2024 to 2.1% in the second quarter as year-on-year growth in employment slowed, while that in non-agricultural output remained unchanged. By contrast, growth in nominal unit labour cost in the formal non-agricultural sector remained unchanged at 3.3% in the second quarter of 2024 as growth in both total remuneration and output remained relatively unchanged. Growth in economy-wide nominal unit labour cost slowed from 4.0% in the second quarter of 2024 to 3.6% in the third quarter as the moderation in growth in the compensation of employees outweighed that in total output.
The slowdown in global consumer price inflation has led to monetary policy easing in many countries in recent months. Domestic inflationary pressures have also receded thus far in 2024, largely reflecting the marked slowdown in fuel price inflation and the appreciation in the exchange value of the rand. Notably, headline consumer and producer price inflation slowed to multi-year lows of 2.8% and -0.7% respectively in October 2024. The moderation in producer price inflation for final manufactured goods was mainly driven by the sharp reversal in producer prices for coal and petroleum products from an increase of 9.2% in May 2024 to a decrease of 18.6% in October. Consumer price inflation remained below the 4.5% midpoint of the inflation target for a second consecutive month in October 2024, largely due to a notable easing in goods price inflation, alongside a modest deceleration in services price inflation. Most measures of underlying inflation remained subdued and slowed throughout the first 10 months of 2024 amid weak consumer demand and the associated impact of the appreciation in the exchange value of the rand.
South Africa’s trade surplus narrowed slightly from R180 billion in the second quarter of 2024 to R177 billion in the third quarter as the value of merchandise and net gold exports decreased more than the value of merchandise imports. The decrease in the value of merchandise exports and imports reflected both lower volumes and prices. South Africa’s terms of trade improved further in the third quarter of 2024 as the rand price of exported goods and services decreased less than that of imports.
The value of merchandise exports decreased by 5.1% in the third quarter of 2024 as decreases in manufacturing and mining exports outweighed the increase in the value of agricultural exports. Almost all subcategories of mining exports decreased over this period, particularly platinum group metals, base metals and articles thereof as well as pearls, precious and semi-precious stones. The decrease in the value of manufacturing exports was largely due to lower exports of vehicles and transport equipment, chemical products, machinery and electrical equipment as well as prepared foodstuffs, beverages and tobacco. By contrast, the higher value of agricultural exports resulted largely from increased exports of citrus fruit.
Following an increase in the second quarter of 2024, the value of merchandise imports decreased by 5.6% in the third quarter as the import value of mining, manufacturing and agricultural products declined. The decrease in the import value of manufactured products resulted primarily from notably lower imports of vehicles and transport equipment, which more than countered the increased imports of chemical products. The decline in agricultural imports was due to lower imports of live animals and animal products as well as rice and wheat. The value of mining imports decreased for a third consecutive quarter in the third quarter of 2024 following decreases in the imports of all the subsectors, particularly mineral products. The import value of mineral products decreased further to its lowest level since the first quarter of 2022, with the value of imported refined petroleum products decreasing to its lowest level in 10 quarters due to a substantial decrease in petrol and diesel imports.
The shortfall on the services, income and current transfer account narrowed for a second consecutive quarter from R255 billion (3.5% of GDP) in the second quarter of 2024 to R248 billion (3.4% of GDP) in the third quarter. Notwithstanding the wider deficit on the income account, the narrower deficits on the services and current transfer accounts reduced the overall deficit on the services, income and current transfer account. This, together with the smaller trade surplus, resulted in a narrowing of the deficit on the current account of the balance of payments from R75.3 billion in the second quarter of 2024 to R70.8 billion in the third quarter. As a ratio of GDP, the deficit on the current account remained broadly unchanged at 1.0% over this period.
The net flow of capital on South Africa’s financial account of the balance of payments (excluding unrecorded transactions) switched from an outflow of R18.1 billion in the second quarter of 2024 to a significant inflow of R39.1 billion in the third quarter. On a net basis, other investment and financial derivatives recorded outflows, while direct investment, portfolio investment and reserve assets recorded inflows.
South Africa’s total external debt increased significantly from US$158.3 billion at the end of March 2024 to US$163.8 billion at the end of June. However, expressed in rand terms, South Africa’s total external debt decreased from R3 007 billion to R2 984 billion over the same period as the exchange value of the rand appreciated by 4.1% against the US dollar over this period.
South Africa’s positive net international investment position decreased from a revised R2 424 billion at the end of March 2024 to R2 052 billion at the end of June as the value of foreign assets decreased and that of foreign liabilities increased. The appreciation in the exchange value of the rand, as reflected by the increase in the nominal effective exchange rate (NEER) in the second quarter of 2024, had a larger impact on foreign assets than on foreign liabilities over this period.
The NEER of the rand increased by 2.3% in the third quarter of 2024 following an increase of 5.2% in the second quarter. Despite geopolitical tensions in the Middle East and increased financial market volatility weighing on the NEER at the beginning of the third quarter, the impact on the exchange value of the rand was fairly muted as the NEER increased in August and September 2024. During this period, global inflation expectations were mixed but resulted in monetary policy easing by several major central banks, including the United States (US) Federal Reserve (Fed) and the European Central Bank. Domestically, the NEER was supported by the continued suspension of electricity load-shedding as well as improved investor sentiment since the formation of the government of national unity (GNU). The increase in the NEER also coincided with the narrowing current account deficit, lower inflation and monetary policy easing by the South African Reserve Bank. However, from the end of September to 29 November 2024, the NEER declined somewhat as US economic data releases reflected a resilient US economy and resulted in a revision in the initial expectations of further monetary policy easing by the US Fed alongside the deterioration in global investor sentiment amid continued rising tensions in the Middle East as well as the conclusion of the US general election. Domestically, the exchange value of the rand was somewhat impacted by the outcome of the 2024 Medium Term Budget Policy Statement (MTBPS), which was released towards the end of October.
Growth in the broadly defined money supply (M3) accelerated in the third quarter of 2024 after slowing in the first half of the year. The year-on-year growth in M3 accelerated from a low of 4.2% in June 2024 to 7.8% in October, reflecting the notable acceleration in the deposit holdings of the corporate sector, while those of the household sector moderated slightly. Growth in M3 averaged 6.1% in the first 10 months of 2024, much lower than the 9.3% recorded over the same period in 2023. On a quarter-to-quarter seasonally adjusted and annualised basis, growth in M3 accelerated from 3.0% in the second quarter of 2024 to 8.2% in the third quarter.
Year-on-year growth in total loans and advances extended by monetary institutions to the domestic private sector decelerated notably from 9.9% in February 2023 to a low of 3.2% in April 2024 and thereafter increased by 4.4% in October. Growth in credit extension averaged 4.2% in the first 10 months of 2024, well below the averages of 7.5% and 7.4% recorded over the same period in 2022 and 2023 respectively as growth in credit extension to the corporate sector edged slightly higher than that of the household sector. Most of the credit categories to the corporate sector decelerated in the first 10 months of 2024, although growth in overdrafts and mortgage advances remained strong. Growth in credit extension to the household sector moderated gradually from 8.0% in January 2023 to 3.2% in October 2024, reflecting a broad-based slowdown across the various credit categories, in both asset-backed and unsecured loans.
The yield on 10-year South African rand-denominated government bonds declined considerably by 232 basis points to a recent low of 9.91% on 27 September 2024 following a high of 12.23% on 16 April. The decline in South African bond yields tracked international bond yields and was influenced by, among other factors, the appreciation in the exchange value of the rand, lower consumer price inflation, recent and anticipated monetary policy easing and improved investor sentiment since the formation of the GNU. Subsequently, the 10-year South African government bond yield increased by 73 basis points to 10.64% on 23 October, along with the depreciation in the exchange value of the rand and higher international bond yields. Thereafter, the yield moved lower to 10.06% on 29 November.
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 7.4% year on year to R6.7 trillion at the end of October 2024. General government continued to account for the largest share of the total outstanding amount of debt securities in issue in the domestic primary debt market at 73.8% (R5.0 trillion). Net issuance of bonds by general government was 17.5% higher in the 10 months to October 2024 compared with the corresponding period of 2023, reflecting the elevated government borrowing requirement due to a combination of revenue shortfall and a sharp rise in expenditure, which resulted in a wider budget deficit in the 2024 MTBPS compared with the projected deficit in the 2024 Budget Review.
The preliminary non-financial public sector borrowing requirement increased by R23.0 billion year on year to R213.6 billion in the first six months (April–September 2024) of fiscal 2024/25. The increase was largely due to the significant increase in the cash deficit of the non-financial public enterprises and corporations, or state-owned companies. By contrast, the consolidated general government recorded a smaller deficit, mostly due to the lower deficit of national government and the higher surplus of extra-budgetary institutions, which were partially offset by the deficit of the consolidated provincial government. In addition, all other levels of general government recorded cash surpluses in the first six months of fiscal 2024/25.
National government’s cash book deficit of R256.0 billion recorded in April–September 2024/25 was R4.2 billion higher than in the corresponding period of the previous fiscal year. However, the primary deficit decreased from R79.2 billion to R65.8 billion during the period under review. The net borrowing requirement in the first six months of fiscal 2024/25 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, resulting in an increase in national government’s gross loan debt to R5 450 billion as at 30 September 2024.
International investment position at the end of June 2024
Economic contraction in the third quater
Official unemployment rate
South Africa's trade surplus in the third quater
