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Production from SA’s factories continued to improve in the last quarter of 2018, data from Statistics SA (Stats SA) showed.
Production from SA’s factories continued to improve in the last quarter of 2018, data from Statistics SA (Stats SA) showed.

Another boost for the manufacturing sector in November

ECONOMIC NEWS

By Sunita Menon - Jan 14th, 11:09

Production from SA’s factories continued to improve in the last quarter of 2018, data from Statistics SA (Stats SA) showed.
 

Annual growth in manufacturing production grew 1.6% in November, in line with the Bloomberg consensus, after a higher-than-expected boost of 3% in September.

The biggest growth drivers were a 5.2% rise in food and beverages; and a 6.2% uptick in motor vehicles, parts and accessories and other transport equipment. However, the basic iron and steel, nonferrous metal products, metal products and machinery division fell by 1.7%.

Compared with October, manufacturing production grew 0.7% in November.

Stats SA’s manufacturing production index, which was at 100 points in 2015, came to 115.8 points in November 2018, up from 113.2 points in October and 114 points in November 2017.

The monthly changes in factory output measured by Stats SA usually tend to be foreshadowed by the Absa-sponsored purchasing managers’ index (PMI), which is usually published on the first business day of each month.

In November, the manufacturing PMI saw its first increase after three straight months of declines, rising to 49.5 index points — the best level since July 2018. A level below 50 points indicates a contraction in the sector. However, in recent months the production figures and the survey have not been in tandem.

In fact, the strong recovery in the third quarter and the continued momentum in the fourth quarter, are despite an average PMI print of only 47.5 in the last three months of 2018.

The sector is expected to fare better in 2019, Nedbank senior economist Nicky Weimar said.

“Export-orientated industries should benefit from a modestly growing world economy and steadier commodity prices, while those industries relying on domestic demand should also fare slightly better,” Weimar said.

However, the sector still faces headwinds, Investec economist Lara Hodes warned.

Local demand remains somewhat subdued, while operational constraints and input cost pressures dampen activity.

“This coupled with waning global export order growth, underpinned by trade concerns could continue to constrain notable growth in the sector,” she said.
Business Live 

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