Growth in the real output of the primary sector accelerated in the first quarter of 2024 due to a significant increase in agricultural output, which resulted largely from the higher production of horticultural products. By contrast, mining output switched to a contraction in the first quarter as production decreased in 10 of the 12 mineral groups, hampered by, among other factors, a shaft closure, electricity-supply disruptions and insufficient rail capacity.

The real output of the secondary sector contracted anew in the first quarter of 2024, as activity decreased in the manufacturing, construction as well as electricity, gas and water sectors. The decrease in manufacturing production was consistent with weak business confidence in the sector and reflected insufficient demand for manufactured goods as well as high operating costs associated with electricity-supply constraints and supply-chain disruptions. Following two consecutive quarters of expansion, the output of the sector supplying electricity, gas and water contracted in the first quarter of 2024 as the volume of both electricity produced and consumed as well as water consumption decreased. The decline in electricity generated reflected weak demand from the electricity-intensive sectors and continued electricity load-shedding during the quarter. Real construction activity contracted for a fourth successive quarter as residential building and civil construction activity decreased.

The real GVA by the tertiary sector remained unchanged in the first quarter of 2024. The real output of the finance, insurance, real estate and business services sector increased only marginally as activity in the monetary intermediation, insurance and real estate subsectors increased slightly. The real GVA by the commerce sector also increased marginally following three successive quarterly declines. Activity in the retail and motor trade subsectors decreased, while wholesale trade as well as catering and accommodation activity increased. By contrast, the real GVA by the transport, storage and communication services sector reverted to a contraction in the first quarter of 2024 as road freight transportation and transport support services decreased.

Real gross domestic expenditure (GDE) decreased by 0.9% in the first quarter of 2024 following an increase of 1.4% in the fourth quarter of 2023. All the components of real gross domestic final demand contracted in the first quarter of 2024, together with a de-accumulation in real inventory holdings. Consequently, the level of real GDE in the first quarter of 2024 was 1.4% lower than a year earlier. Only real net exports contributed positively to growth in real GDP in the first quarter of 2024, as real imports contracted more than real exports.

Real final consumption expenditure by households decreased by 0.3% in the first quarter of 2024 following a marginal increase in the fourth quarter of 2023. The decrease was fairly broad-based among the expenditure components as consumption expenditure was suppressed by a decrease in the real disposable income of households. The level of real final consumption expenditure by households was 0.4% lower in the first quarter of 2024 compared with the first quarter of 2023, reflecting weak consumer demand amid elevated inflation and high interest rates.

Household debt as a percentage of nominal disposable income increased from 62.2% in the fourth quarter of 2023 to 63.3% in the first quarter of 2024 as the increase in household debt exceeded that in nominal disposable income. Similarly, households’ cost of servicing debt relative to disposable income increased from 9.0% to 9.2% over the same period.

Households’ net wealth decreased in the first quarter of 2024 as the value of their assets decreased while the value of their liabilities increased. The decrease in total assets was largely due to the lower market value of equities as the FTSE/JSE All-Share Index (Alsi) decreased in the first quarter of 2024, while the value of housing stock increased slightly. However, growth in nominal residential property prices remained subdued in the first five months of 2024 and still well below headline consumer price inflation, reflecting weak domestic economic activity and a high interest rate environment, which continued to impact on consumer affordability.

Real gross fixed capital formation contracted for a third successive quarter in the first quarter of 2024 as capital outlays by the private sector decreased notably while fixed investment spending by the public sector increased. The decrease was broad-based among the different asset categories, with the level of real gross fixed capital formation 2.8% lower in the first quarter of 2024 than a year earlier as business confidence remained low amid the prevailing weak economic growth outcomes.

Total household-surveyed employment increased by 22 000 in the first quarter of 2024, essentially recovering the jobs lost in the fourth quarter of 2023. The formal, agricultural and private household sectors employed more people in the first quarter of the year, while informal sector employment decreased notably. The year-on-year pace of increase in total employment slowed further to 3.4% in the first quarter of 2024, significantly below the recent peak of 10.4% in the third quarter of 2022, as the strong post-pandemic recovery in employment appeared to be losing some momentum.

South Africa’s official unemployment rate increased further from 32.1% in the fourth quarter of 2023 to 32.9% in the first quarter of 2024 due to a significant increase in the number of unemployed persons. Following nine consecutive quarterly decreases, the expanded unemployment rate increased by a similar magnitude to 41.9% in the first quarter of 2024 as the number of discouraged work seekers remained broadly unchanged.

The year-on-year pace of increase in formal non-agricultural nominal remuneration per worker remained unchanged at 4.7% in the fourth quarter of 2023, as the marginal acceleration in private sector remuneration growth per worker was offset by a contraction in public sector remuneration per worker. Growth in annual average nominal remuneration per worker accelerated from 4.0% in 2022 to 4.7% in 2023. With nominal wage growth keeping pace with the cost of living, annual average real wages per worker were unchanged in 2023 following a contraction in 2022.

Labour productivity in the formal non-agricultural sector increased by 1.9% in the year to the fourth quarter of 2023 after decreasing by 2.2% in the third quarter. Following a notable slowdown in growth in 2022 as the pandemic-induced base effects dissipated, labour productivity decreased by 0.2% on an annual average basis in 2023. Growth in nominal unit labour cost (ULC) in the formal non-agricultural sector slowed sharply in the fourth quarter of 2023. Similarly, growth in economy-wide nominal ULC moderated further in the first quarter of 2024.

After moderating throughout 2023, headline consumer price inflation remained above the midpoint of the 3–6% inflation target range and averaged 5.3% in the first five months of 2024. Goods price inflation slowed notably over this period despite the acceleration in fuel price inflation, while services price inflation accelerated largely due to the significant increase in health insurance prices. Although food price inflation decelerated further due to broad-based disinflation across the consumer food categories, the spot prices of domestic maize and wheat contracts increased in the first five months of the year. Core inflation accelerated in the first two months of 2024 but then slowed again to just above the midpoint of the inflation target range in April and May.

South Africa’s trade surplus with the rest of the world more than doubled to R183 billion in the first quarter of 2024 as the value of merchandise imports decreased while that of merchandise and net gold exports increased marginally. The decrease in the value of merchandise imports reflected lower volumes while the increase in the value of exports reflected higher prices. Consequently, South Africa’s terms of trade improved in the first quarter of 2024 as the rand price of exported goods and services increased more than that of imports.

The slight increase in the value of merchandise exports in the first quarter of 2024 resulted from increases in the value of mining and agricultural exports, which marginally outweighed the decrease in the value of manufacturing exports. The higher mining exports largely reflected an increase in mineral exports, notably manganese ore, refined petroleum products and iron ore. The lower value of manufacturing exports resulted largely from reduced exports of vehicles and transport equipment, chemical products as well as machinery and electrical equipment.

The decrease in the value of merchandise imports in the first quarter of 2024 reflected lower imports of mining and agricultural products while manufacturing imports increased. Mining imports were weighed down by a sharp decrease in mineral products, which reflected base effects following considerable increases in imported crude oil and refined petroleum products in the fourth quarter of 2023. The higher value of manufacturing imports resulted from increased imports of most manufactured products, except for vehicles and transport equipment.

The deficit on the current account of the balance of payments narrowed from R163 billion (2.3% of GDP) in the fourth quarter of 2023 to R84.6 billion (1.2% of GDP) in the first quarter of 2024. This resulted from the larger trade surplus, which outweighed the slight increase in the shortfall on the services, income and current transfer account.

The net flow of capital on South Africa’s financial account of the balance of payments (excluding unrecorded transactions) switched from a revised outflow of R10.0 billion in the fourth quarter of 2023 to a significant inflow of R51.4 billion in the first quarter of 2024. On a net basis, all financial account categories recorded inflows, except for portfolio investment.

South Africa’s total external debt increased from US$156.1 billion at the end of September 2023 to US$158.1 billion at the end of December, and only slightly when expressed in rand terms, from R2 932 billion to R2 938 billion over this period.

South Africa’s positive net international investment position (IIP) increased from a revised R1 872 billion at the end of September 2023 to R1 957 billion at the end of December as the value of foreign assets increased more than that of foreign liabilities. The increase in both foreign assets and liabilities was mainly driven by price valuation effects as domestic and foreign share market indices increased in the fourth quarter of 2023.

Growth in the broadly defined money supply (M3) accelerated from a recent low of 5.5% in November 2023 to 6.8% in March 2024 – still significantly lower than the post-pandemic high of 11.2% recorded in June 2023 – before moderating again in April. The quarter-to-quarter seasonally adjusted and annualised growth in M3 accelerated notably in the first quarter of 2024, reflecting a rebound in the deposit growth of the corporate sector, most notably of non-financial companies, while growth in household deposits slowed marginally in the opening months of the year.

Year-on-year growth in credit extended by monetary institutions to the domestic private sector decelerated gradually from 9.9% in February 2023 to 3.1% in April 2024, reflecting slower growth in loans extended to both households and companies. The slowdown in credit extension to companies reflected weak business confidence amid high and rising operating costs as well as slowing consumer demand. The moderation in credit extension to households was fairly broad-based within an elevated interest rate environment, while banks also tightened their lending standards due to high and rising default rates.

The nominal effective exchange rate (NEER) of the rand increased by 0.8% in the first quarter of 2024 despite the domestic currency depreciating against the United States (US) dollar over this period. The NEER displayed some volatility during the first quarter of the year as investor uncertainty increased globally following expectations that interest rates in the US would remain higher for longer, along with intensified geopolitical tensions and global economic growth concerns. Weak domestic economic growth and uncertainty surrounding the outcome of South Africa’s general elections in May 2024 also impacted on the exchange value of the rand in the first quarter of the year. The NEER then increased further up to 14 June 2024 on improved investor sentiment as electricity load-shedding was suspended from the end of March 2024 and an agreement was reached on the formation of a government of national unity following the general elections.

The yield on 10-year South African rand-denominated government bonds increased from 10.96% on 20 December 2023 to 12.23% on 16 April 2024, largely reflecting a depreciation in the exchange value of the rand against the US dollar and higher international bond yields as expectations of interest rate cuts by the US Federal Reserve (Fed) kept being pushed further into the future. Bond yields were also affected by heightened global uncertainty, with national elections taking place in several countries in 2024. Subsequently, the domestic 10-year government bond yield decreased to 11.46% on 14 June 2024 along with an appreciation in the exchange value of the rand, a moderation in domestic consumer price inflation and increased demand for government bonds by non-residents.

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 7.8% year on year to R6.4 trillion at the end of April 2024. General government’s outstanding amount in issue increased by 10.5% over this period to fund the larger borrowing requirement, and accounted for 73.2% of the total amount of debt securities in issue at the end of April 2024. By contrast, net issues in the domestic primary corporate bond market in the fourth quarter of 2023 switched to net redemptions in the first four months of 2024, mainly due to subdued financial corporate bond activity, especially net redemptions of unlisted debt securities by banks.

The preliminary non-financial public sector borrowing requirement increased significantly by R142.8 billion year on year to R293.3 billion in fiscal 2023/24 due to the substantially larger deficits of the extra-budgetary institutions, national government, consolidated provincial government as well as non-financial public enterprises and corporations. National government’s cash deficit increased by R14.0 billion to R313.6 billion in fiscal 2023/24, reflecting slightly faster growth in expenditure than in revenue. Growth in revenue was curtailed by a notable decrease in corporate income tax (CIT) collections.

The borrowing requirement was primarily financed in the domestic financial markets through the net issuance of long-term government bonds as well as Treasury bills (TBs) and short-term loans. Consequently, national government’s total gross loan debt increased by 10.3% year on year to R5 259 billion (74.1% of GDP) as at 31 March 2024, with domestic debt accounting for 88.7% of the total.