Most pressure still on the secondary sector

From the national accounts for Q3 2016 we today highlight the five worst performing sectors. We cover what the NBS terms activity sectors, and then only those accounting for at least 1% of GDP at constant basic prices. The data show agriculture expanding by 4.5% y/y, and industry and services contracting by -12.2% and -1.2% respectively. Industry (the secondary sector) was dragged down by the -22.0% y/y contraction in the oil and natural gas sector. We doubtless were not alone in thinking that its performance in Q2 (-17.5%) could not get any worse.
Probably the best evidence of the softness of the non-oil economy, which was flat y/y in Q3, is that trade, the second largest sector of the economy, declined by -1.4% y/y. Trade is the most reliable measure of demand across all income levels. 

Manufacturing sector contraction picked up from -3.4% y/y to -4.4%. For the largest segment of the sector (food, beverages and tobacco), it accelerated from -5.5% y/y to -5.8%.  Its underperformance relative to most other segments may be traced to its high import requirement. 

The data for the diverse services sector do not send any clear signals. Public administration (see below), and real estate both shrank by more than -3.0% y/y. Their performance more than outweighed the modest growth y/y posted by financial and insurance, information and communications, and professional, scientific and technical services. 


November 24 Sources: National Bureau of Statistics (NBS); FBNQuest Research

Some observers might be tempted to cheer that public administration contracted by -3.6% y/y, and for the seventh quarter in succession. They should celebrate if public sector output improves. They should also remember that the sector’s output includes the consumption of fixed capital as well as the remuneration of employees. 

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