BYLINE: Ethel Hazelhurst

Strikes in the third quarter contributed to a 6.6 percent contraction in the manufacturing sector, slicing deep into economic growth. Statistics SA reported yesterday that gross domestic product (GDP) expanded only 0.7 percent in the quarter, below expectations that the economy would grow 1 percent, following a surge of 3.2 percent in the second quarter off a low first-quarter base.

Kevin Lings, the chief economist at Stanlib, said the manufacturing sector subtracted around 1 percentage point from third-quarter growth. "This means that, without manufacturing, GDP would have grown by 1.7 percent, which is itself fairly modest."

The figures are quarterly changes adjusted for inflation and seasonal factors and multiplied by four to show an annual trend. The third-quarter performance is the worst since the recession of 2008/09 when the economy contracted for three consecutive quarters.

Manufacturing's poor performance was no surprise. Reserve Bank governor Gill Marcus noted last week that "protracted strikes had resulted in a 27.9 percent decline in the production of motor vehicles, parts and accessories" in the third quarter.

Other sectors fared better, with mining rebounding 11.4 percent, after shrinking 5.4 percent in the second quarter - also largely due to strikes.

However, Nedbank saw "downside surprises" in retail and wholesale trade, which was up 3.2 percent, finance (up 3.5 percent) and government services (1 percent higher).

Annabel Bishop, the chief economist at Investec, blamed the weak overall outcome on a variety of factors: "Significant strike-related work stoppages, falling confidence levels, slowing consumer spending due to high indebtedness and moderating growth in real disposable incomes, inconsistent electricity supply, rising government regulations and red tape, and a reduction in the ease of doing business."

These domestic issues compounded the challenges of an uncertain global environment. …