Households spent more between April and June. The government spent more. Businesses put more stock on their shelves. And the economy still went backwards. Statistics South Africa reported on Tuesday that GDP fell 0,2% in the second quarter, ending six straight quarters of growth. A Bloomberg survey of 14 economists had expected a fall of half that size.
There are two ways to add up an economy, and Stats SA publishes both. One counts what the country produced, industry by industry. The other counts what was spent on it: by households, by government, by businesses buying buildings and machinery, and by the rest of the world buying our exports, less everything we bought in from abroad. Both landed on the same minus 0,2%, and only one of them got reported.
What came in through the ports
Imports grew 4,9% over the quarter. Exports grew 0,9%. The gap between those two took 1,1 percentage points off growth on its own, which is more than the whole contraction. What arrived was machinery and electrical equipment, mineral products, chemicals and plastics, which is the shopping list of a country still buying the things it makes other things with.
Domestic demand, meanwhile, went up. Households lifted their spending 0,4%, buying more food and soft drinks, more recreation and more health care. Government spending rose by the same amount, almost all of it salaries. Inventories added 0,6 of a percentage point as trade and manufacturing built up stock they had not sold. Consumers were not what went wrong here.
The part that did not get built
Investment is where the discomfort sits. Gross fixed capital formation, which is the money spent on buildings, machinery and vehicles that will still be there next year, fell 0,2% for a second quarter running. Construction works took the largest bite out of it and transport equipment the next largest. Public corporations and private business both pulled back, and only general government put more in.
On the production side three industries shrank. Mining fell 3,0%, led by platinum group metals, manganese ore, gold and iron ore. Trade, catering and accommodation fell 1,9%, dragged by wholesale, motor trade and food and beverages even while retail and accommodation held up. Manufacturing fell 1,8%, its third decline in a row. Seven industries grew, and between them they were not enough.
Stats SA will rebase the national accounts from 2015 prices to 2022 prices in October, which will move every number above. Before that, one more negative quarter makes it a recession, and the first mining, manufacturing and sales figures for the third quarter arrive next week.
