MANUFACTURING production increased 0.4% year on year in July, slowing
much more than expected from a revised 4.7% increase in June.
The median consensus forecast from a survey of six economists was for manufacturing production growth to have slowed to 3.4%.
Statistics SA’s latest data on the sector lend credence to the view
that the recent good news on economic growth will be short-lived.
Manufacturing,
which is the country’s fourth-biggest economic sector and accounts for
about an eighth of SA’s gross domestic product (GDP), was one of the two
main drivers of the surprisingly large improvement in second-quarter
economic growth announced on Tuesday.
Manufacturing increased by
8.1% due to higher production in petroleum, chemical products, rubber
and plastic products; and motor vehicles, Statistics SA said.
But
economists expressed doubt that manufacturing could sustain its
strength, and the Barclays/Bureau for Economic Research purchasing
managers index on Thursday last week seemed to back that view, pointing
to a sharp fall in activity during August.
The PMI broke a five-month string of readings above
the 50-point dividing line between expansion and contraction with a
surprise 6.2-point fall to 46.3, taking strain from lower commodity
prices and still-subdued global and domestic demand.
Compared with June, manufacturing output shrank 1.5% in July.
The sectors that led the year-on-year contraction were:
•
basic iron and steel, non-ferrous metal products, metal products and
machinery (down 4.9% and contributing 0.9 percentage points);
• electrical machinery (down 13.7% and contributing 0.3 percentage points);
• motor vehicles, parts and accessories and other transport equipment (down 3.8% and contributing 0.3 percentage points); and
• food and beverages (down 0.8% and contributing 0.2 percentage points).
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