The key indicator of economic growth is gross domestic product (GDP), which is an estimate derived from a wide range of data sets measuring different elements of economic activity.
On Tuesday, Statistics SA published the latest estimates of value added and GDP, covering the second quarter of 2006. The time series for GDP shows that the local economy has expanded for 31 consecutive quarters, with the last decline in growth recorded in the third quarter of 1998 when growth was minus 0.9 percent.
In the second quarter of 2006, the seasonally adjusted real GDP at market prices, compared with the first quarter of 2006, increased by an annualised rate of 4.9 percent.
The corresponding increases for the respective quarters of 2005 were 4.6 percent, 5.3 percent, 4.1 percent and 3.2 percent, yielding an annual growth rate of 4.9 percent in real GDP at market prices.
The main contributors to the increase in economic activity for the second quarter of 2006 were the following industries: finance, property and business services (1.7 percentage points), manufacturing (1 percentage point), wholesale and retail trade, hotels and restaurants (0.9 percentage point); transport and communication (0.6 percentage point) and construction (0.4 percentage point).
The performance of these industries was not surprising in the light of data already published in Stats SA's monthly economic series.
The monthly series on manufacturing production and sales, for example, had already indicated strong performance in the sector, as had the economic series related to monthly trade (including wholesale, retail and motor trade).
If the volatile agricultural industry is stripped out of the latest GDP estimates, the economy grew by 5.8 percent in the second quarter of 2006. If both agriculture and mining (the primary industries) are excluded, GDP growth is estimated at 6 percent. Although overall growth in primary industries declined by 8.6 percent, this was more than offset by growth of 6.9 percent in secondary industries, and 5.6 percent in tertiary industries.
As commonly occurs when more data become available, revisions in previous GDP estimates were announced at the same time as second-quarter estimates were published.
Estimates for the first quarter of 2006 for the mining and agricultural industries were revised downwards, resulting in lower estimates of GDP for that quarter (the seasonally adjusted annualised growth was revised from 4.2 percent to 4 percent).
Structurally the economy is still dominated by the finance, real estate and business services industry (19.8 percent contribution), followed by the manufacturing industry (16.3 percent) and the trade sector with 14 percent.
As far as primary industry is concerned, agriculture, forestry and fishing contributed 2.4 percent, and mining and quarrying 6 percent.
The accuracy of GDP estimates is heavily dependent on the quality of the data integrated to construct this indicator. Measuring the quality of statistics involves a range of dimensions, including relevance, accuracy, timeliness, accessibility, interpretability, coherence, methodology and integrity, each of which has its own challenges in terms of quantifiable indicators.
Stats SA has recently initiated an ambitious programme whereby data sets, which feed into GDP estimations, are subject to ongoing assessment in terms of these quality dimensions. This will facilitate a continuous improvement in the accuracy of GDP estimations.