Advertise with fastmoving.co.za
 
 

Figures for the manufacturing sector, which accounts for about 13% of GDP, could reflect a slow rebound in the second half of 2018.
Figures for the manufacturing sector, which accounts for about 13% of GDP, could reflect a slow rebound in the second half of 2018.

Green shoots for SA's manufacturing sector

ECONOMIC NEWS

By Sunita Menon - Dec 4th 2018, 10:04

As manufacturing looks set to boost GDP in the third quarter, a survey has showed that factory owners are more upbeat about the sector. 

The Absa purchasing managers index (PMI), which gauges activity in the manufacturing sector, rose to 49.5 from 42.4 in October. This the highest level the index has reached since July 2018.

The monthly survey tends to be a good predictor of the manufacturing production and sales figures that Statistics SA provides about two months later. A figure below 50 indicates contraction in the sector.

This comes the day before the third-quarter GDP figures are set to be released by Statistics SA. Many economists are in agreement that SA will emerge from its first recession since the global financial crisis. All of the analysts polled by Bloomberg predict that figures released on Tuesday will show that GDP rose.

However, growth is still expected to remain lacklustre for the year. The Treasury expects benign growth of 0.7% while the Reserve Bank expects 0.6% in 2018.

Persistent low growth stunts job creation and dampens investment. As the 2019 election approaches, stronger growth will bode well for President Cyril Ramaphosa, who has been under pressure to boost the economy and make a dent in unemployment. The president recently hosted jobs and investment summits and announced a R50bn economic stimulus plan in an effort to resuscitate the economy

“Today’s surprisingly strong result will add to the improved sentiment surrounding SA’s economy. Recent figures have all suggested that the economy began to exit recession in the middle of the third quarter,” said Capital Economics economist John Ashbourne.

Manufacturing, which accounts for about 13% of GDP, contracted 0.3% in the second quarter and shed 105,000 jobs. However, the third-quarter figures show that the sector’s production was 1.7%, which will contribute positively to growth.

The lift in the third-quarter growth figures is expected to have been underpinned by positive growth in the manufacturing and trade sectors, Investec economist Kamilla Kaplan said.

While a slow rebound in the sector is welcome, the overall momentum in manufacturing sector activity remains generally soft, said Absa economist Miyelani Maluleke.

The sector has significant underutilised capacity, and urgent demand-side interventions are required to slow the rate of job losses and de-industrialisation before real growth is observed, and new jobs are created, warned Philippa Rodseth, the executive director of the Manufacturing Circle, which is the industry voice.
Business Live 

Read more about: stats sa | sa economy | pmi | manufacturing

Related News

Retail sales beat expectations in February
19/04/2019 - 12:39
SA shoppers spent more than expected in February, with retail sales growing 1.1% year on year, led by expenditure in the textiles, footwear and clothing sector.

Chicken prices may spike by up to 32% due to tariff increases, says importers
18/04/2019 - 09:22
Increasing tariffs on imported poultry products could hike chicken prices by up to 32%, says consumer bodies and importers and exporters organisation.

Inflation accelerates in March after painful fuel price increase
17/04/2019 - 13:29
Another fuel price hike in March led to inflation hitting the midpoint of the Reserve Bank’s 3%-6% target range.

Moody’s expects SA confidence to rise after elections
17/04/2019 - 09:13
SA is expected to see a surge in confidence following the elections in May, as the current administration under President Cyril Ramaphosa is continuing to gradually move forward with the implementation of its reform agenda, Moody’s Investors Service said.

Motorists should brace for another petrol shock
16/04/2019 - 08:20
Unexpectedly strong international fuel prices have raised the likelihood of an unwelcome fuel price hike for petrol users in May.