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Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
December 6, 2024

Gross Operating Surplus

A View on Company Profits 2024Q3

Company is crucial for investors and the government, influencing investment potential and tax revenue. The latest data from Statistics South Africa shows a 2.9% quarterly decrease in Gross Operating Surplus (GOS) but a 4.5% annual increase, indicating profitability growth. Notably, sectors like mining and transport exceeded inflation rates, signaling positive market sentiment and potential for increased investment in South Africa over the medium to long term.

Company profits is a significant concern for both investors and the government. Investors assess potential returns, while the government evaluates how policy changes affect tax revenue and the broader economy.

A fundamental way to gauge profitability in an economic sector is by estimating the Gross Operating Surplus (GOS) at specific intervals, such as quarterly. The latest data from Statistics South Africa (Stats SA) for the third quarter of 2024 shows that GOS can be erratic but generally follows GDP inflation trends, as demonstrated in the accompanying graph. In Q3 2024, company profits were 2.9% lower compared to the previous quarter but increased by 4.5% compared to the same period in 2023. This rise in profits slightly outpaced GDP inflation, indicating a marginal growth in profitability.

The overall annual growth in GOS is a positive sign, as rising profitability enhances the potential for investment and further economic expansion. Notably, profits in the mining, transport, and personal services sectors grew at rates exceeding inflation during this period. Such profitability increases often lead to higher employment, production, and overall sector profitability in the medium term, if the trend continues.

The sustained annual rise in total GOS reflects encouraging market sentiment throughout the economy. This growth enhances production output and returns for all market participants, positioning South Africa for a much-needed increase in investment over the medium to long term.

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More Coverage

Mining Production and Sales

August 2025
In August 2025, mining activity in South Africa declined by 0.2% year-on-year, following a 5.1% increase in July.

Manufacturing Production

August 2025
In August, South Africa’s manufacturing output further declined by 1.5%, following a 1.3% decrease in July. This downturn was significantly below market expectations, which had forecasted a 0.3% increase for August. The Purchasing Managers’ Index (PMI) also fell by 1.4 points, from 50.8 in July to 49.5 in August 2025, indicating a less favourable business climate anticipated by manufacturers for the month.

Reviving South Africa’s Economy

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Gold and Foreign Exchange

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The South African International Liquidity Position, measured by Net Gold and Foreign Exchange Reserves, showed growth in both USD and Rand terms for September 2025.

Private Sector Credit Extension (PSCE)

August 2025
In August 2025, credit demand grew by 5.9%, slightly below the anticipated market prediction of 6.0% for the month. Since the initiation of interest rate cuts in September 2024, there has been a noticeable acceleration in overall credit growth, with most subcategories showing increases, particularly in July.
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