South Africa’s data card was headlined by mining output data for September yesterday. The headline growth figure rose from 0.3% y/y to 4.7% y/y, which exceeded consensus expectations. The largest positive contributors to this month’s reading were PGMs, which grew +6.7% y/y versus +4.7% y/y in August. Iron Ore saw a significant increase of +10.0% y/y, improving from the August reading of -15.1% y/y. Manganese ore declined slightly to +13.5% y/y, from +15.6 % y/y in August, while chromium ore growth declined to +17.3% y/y from +24.8% y/y. Finally, the biggest difference came in diamonds, which impressively increased by +35.4% y/y after contracting by -7.2% y/y. The only negative contributors in September were coal (decreasing by -4.4% y/y, after increasing by +0.4% y/y last month) and gold (-3.7% y/y from -4.6% y/y in August). September’s positive print is welcome after the industry struggled to reach its pre-virus production levels. The nearly seven-month mark of no load-shedding could be contributing to the industry’s performance. However, in the face of deindustrialisation, adequate reform policies need to be implemented for sustained growth to manifest.
On the international front, it’s been a busy 24 hours. There were the ECB’s October meeting minutes, which all but cemented a December rate cut. US PPI data showed slightly stronger-than-expected inflationary pressures, while jobless claims fell to their lowest since May to point to a resilient labour market. Overnight, Chinese retail, industrial, and housing sector data suggested more policy support was needed to kickstart a recovery, while Japanese GDP numbers suggested the economy could withstand more BoJ rate hikes in the new year. Arguably, the main market-mover in the past 24 hours was Fed Chair Powell’s speech yesterday, in which he noted that a strong US economy gives the central bank room to lower interest rates at a careful pace. Fedspeak, generally, has been more cautious in recent weeks, pushing up US Treasury yields and, in turn, supporting the USD as traders pare back expectations of near-term monetary easing. This dynamic will likely persist in the short term, with nothing to suggest that the US economy is folding under high rates.